[House Report 116-150]
[From the U.S. Government Publishing Office]
116th Congress } { Report
HOUSE OF REPRESENTATIVES
1st Session } { 116-150
======================================================================
RAISE THE WAGE ACT
_______
July 11, 2019.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Scott of Virginia, from the Committee on Education and Labor,
submitted the following
R E P O R T
together with
MINORITY VIEWS
[To accompany H.R. 582]
[Including cost estimate of the Congressional Budget Office]
The Committee on Education and Labor, to whom was referred
the bill (H.R. 582) to provide for increases in the Federal
minimum wage, and for other purposes, having considered the
same, report favorably thereon with an amendment and recommend
that the bill as amended do pass.
CONTENTS
Page
Purpose and Summary.............................................. 4
Committee Action................................................. 6
Committee Views.................................................. 14
Section-by-Section Analysis...................................... 45
Explanation of Amendments........................................ 47
Application of Law to the Legislative Branch..................... 47
Unfunded Mandate Statement....................................... 47
Earmark Statement................................................ 47
Roll Call Votes.................................................. 47
Statement of Performance Goals and Objectives.................... 56
Duplication of Federal Programs.................................. 56
Hearings......................................................... 56
Statement of Oversight Findings and Recommendations of the
Committee...................................................... 56
New Budget Authority and CBO Cost Estimate....................... 56
Committee Cost Estimate.......................................... 60
Changes in Existing Law Made by the Bill, as Reported............ 60
Minority Views................................................... 78
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Raise the Wage Act''.
SEC. 2. MINIMUM WAGE INCREASES.
(a) In General.--Section 6(a)(1) of the Fair Labor Standards Act of
1938 (29 U.S.C. 206(a)(1)) is amended to read as follows:
``(1) except as otherwise provided in this section, not less
than--
``(A) $8.55 an hour, beginning on the effective date
under section 7 of the Raise the Wage Act;
``(B) $9.85 an hour, beginning 1 year after such
effective date;
``(C) $11.15 an hour, beginning 2 years after such
effective date;
``(D) $12.45 an hour, beginning 3 years after such
effective date;
``(E) $13.75 an hour, beginning 4 years after such
effective date;
``(F) $15.00 an hour, beginning 5 years after such
effective date; and
``(G) beginning on the date that is 6 years after
such effective date, and annually thereafter, the
amount determined by the Secretary under subsection
(h);''.
(b) Determination Based on Increase in the Median Hourly Wage of All
Employees.--Section 6 of the Fair Labor Standards Act of 1938 (29
U.S.C. 206) is amended by adding at the end the following:
``(h)(1) Not later than each date that is 90 days before a new
minimum wage determined under subsection (a)(1)(G) is to take effect,
the Secretary shall determine the minimum wage to be in effect under
this subsection for each period described in subsection (a)(1)(G). The
wage determined under this subsection for a year shall be--
``(A) not less than the amount in effect under subsection
(a)(1) on the date of such determination;
``(B) increased from such amount by the annual percentage
increase, if any, in the median hourly wage of all employees as
determined by the Bureau of Labor Statistics; and
``(C) rounded up to the nearest multiple of $0.05.
``(2) In calculating the annual percentage increase in the median
hourly wage of all employees for purposes of paragraph (1)(B), the
Secretary, through the Bureau of Labor Statistics, shall compile data
on the hourly wages of all employees to determine such a median hourly
wage and compare such median hourly wage for the most recent year for
which data are available with the median hourly wage determined for the
preceding year.''.
SEC. 3. TIPPED EMPLOYEES.
(a) Base Minimum Wage for Tipped Employees and Tips Retained by
Employees.--Section 3(m)(2)(A)(i) of the Fair Labor Standards Act of
1938 (29 U.S.C. 203(m)(2)(A)(i)) is amended to read as follows:
``(i) the cash wage paid such employee, which for purposes of
such determination shall be not less than--
``(I) for the 1-year period beginning on the
effective date under section 7 of the Raise the Wage
Act, $3.60 an hour;
``(II) for each succeeding 1-year period until the
hourly wage under this clause equals the wage in effect
under section 6(a)(1) for such period, an hourly wage
equal to the amount determined under this clause for
the preceding year, increased by the lesser of--
``(aa) $1.50; or
``(bb) the amount necessary for the wage in
effect under this clause to equal the wage in
effect under section 6(a)(1) for such period,
rounded up to the nearest multiple of $0.05;
and
``(III) for each succeeding 1-year period after the
increase made pursuant to subclause (II), the minimum
wage in effect under section 6(a)(1); and''.
(b) Tips Retained by Employees.--Section 3(m)(2)(A) of the Fair Labor
Standards Act of 1938 (29 U.S.C. 203(m)(2)(A)) is amended--
(1) in the second sentence of the matter following clause
(ii), by striking ``of this subsection, and all tips received
by such employee have been retained by the employee'' and
inserting ``of this subsection. Any employee shall have the
right to retain any tips received by such employee''; and
(2) by adding at the end the following: ``An employer shall
inform each employee of the right and exception provided under
the preceding sentence.''.
(c) Scheduled Repeal of Separate Minimum Wage for Tipped Employees.--
(1) Tipped employees.--Section 3(m)(2)(A) of the Fair Labor
Standards Act of 1938 (29 U.S.C. 203(m)(2)(A)), as amended by
subsections (a) and (b), is further amended by striking the
sentence beginning with ``In determining the wage an employer
is required to pay a tipped employee,'' and all that follows
through ``of this subsection.'' and inserting ``The wage
required to be paid to a tipped employee shall be the wage set
forth in section 6(a)(1).''.
(2) Publication of notice.--Subsection (i) of section 6 of
the Fair Labor Standards Act of 1938 (29 U.S.C. 206), as
amended by section 5, is further amended by striking ``or in
accordance with subclause (II) or (III) of section
3(m)(2)(A)(i)''.
(3) Effective date.--The amendments made by paragraphs (1)
and (2) shall take effect on the date that is one day after the
date on which the hourly wage under subclause (III) of section
3(m)(2)(A)(i) of the Fair Labor Standards Act of 1938 (29
U.S.C. 203(m)(2)(A)(i)), as amended by subsection (a), takes
effect.
SEC. 4. NEWLY HIRED EMPLOYEES WHO ARE LESS THAN 20 YEARS OLD.
(a) Base Minimum Wage for Newly Hired Employees Who Are Less Than 20
Years Old.--Section 6(g)(1) of the Fair Labor Standards Act of 1938 (29
U.S.C. 206(g)(1)) is amended by striking ``a wage which is not less
than $4.25 an hour.'' and inserting the following: ``a wage at a rate
that is not less than--
``(A) for the 1-year period beginning on the effective date
under section 7 of the Raise the Wage Act, $5.50 an hour;
``(B) for each succeeding 1-year period until the hourly wage
under this paragraph equals the wage in effect under section
6(a)(1) for such period, an hourly wage equal to the amount
determined under this paragraph for the preceding year,
increased by the lesser of--
``(i) $1.25; or
``(ii) the amount necessary for the wage in effect
under this paragraph to equal the wage in effect under
section 6(a)(1) for such period, rounded up to the
nearest multiple of $0.05; and
``(C) for each succeeding 1-year period after the increase
made pursuant to subparagraph (B)(ii), the minimum wage in
effect under section 6(a)(1).''.
(b) Scheduled Repeal of Separate Minimum Wage for Newly Hired
Employees Who Are Less Than 20 Years Old.--
(1) In general.--Section 6(g) of the Fair Labor Standards Act
of 1938 (29 U.S.C. 206(g)), as amended by subsection (a), shall
be repealed.
(2) Publication of notice.--Subsection (i) of section 6 of
the Fair Labor Standards Act of 1938 (29 U.S.C. 206), as
amended by section 3(c)(2), is further amended by striking ``or
subparagraph (B) or (C) of subsection (g)(1),''.
(3) Effective date.--The repeal and amendment made by
paragraphs (1) and (2), respectively, shall take effect on the
date that is one day after the date on which the hourly wage
under subparagraph (C) of section 6(g)(1) of the Fair Labor
Standards Act of 1938 (29 U.S.C. 206(g)(1)), as amended by
subsection (a), takes effect.
SEC. 5. PUBLICATION OF NOTICE.
Section 6 of the Fair Labor Standards Act of 1938 (29 U.S.C. 206), as
amended by the preceding sections, is further amended by adding at the
end the following:
``(i) Not later than 60 days prior to the effective date of any
increase in the required wage determined under subsection (a)(1) or
subparagraph (B) or (C) of subsection (g)(1), or in accordance with
subclause (II) or (III) of section 3(m)(2)(A)(i) or section
14(c)(1)(A), the Secretary shall publish in the Federal Register and on
the website of the Department of Labor a notice announcing each
increase in such required wage.''.
SEC. 6. PROMOTING ECONOMIC SELF-SUFFICIENCY FOR INDIVIDUALS WITH
DISABILITIES.
(a) Wages.--
(1) Transition to fair wages for individuals with
disabilities.--Subparagraph (A) of section 14(c)(1) of the Fair
Labor Standards Act of 1938 (29 U.S.C. 214(c)(1)) is amended to
read as follows:
``(A) at a rate that equals, or exceeds, for each year, the
greater of--
``(i)(I) $4.25 an hour, beginning 1 year after the
date the wage rate specified in section 6(a)(1)(A)
takes effect;
``(II) $6.40 an hour, beginning 2 years after such
date;
``(III) $8.55 an hour, beginning 3 years after such
date;
``(IV) $10.70 an hour, beginning 4 years after such
date;
``(V) $12.85 an hour, beginning 5 years after such
date; and
``(VI) the wage rate in effect under section 6(a)(1),
on the date that is 6 years after the date the wage
specified in section 6(a)(1)(A) takes effect; or
``(ii) if applicable, the wage rate in effect on the
day before the date of enactment of the Raise the Wage
Act for the employment, under a special certificate
issued under this paragraph, of the individual for whom
the wage rate is being determined under this
subparagraph,''.
(2) Prohibition on new special certificates; sunset.--Section
14(c) of the Fair Labor Standards Act of 1938 (29 U.S.C.
214(c)) (as amended by paragraph (1)) is further amended by
adding at the end the following:
``(6) Prohibition on new special certificates.--
Notwithstanding paragraph (1), the Secretary shall not issue a
special certificate under this subsection to an employer that
was not issued a special certificate under this subsection
before the date of enactment of the Raise the Wage Act.
``(7) Sunset.--Beginning on the day after the date on which
the wage rate described in paragraph (1)(A)(i)(VI) takes
effect, the authority to issue special certificates under
paragraph (1) shall expire, and no special certificates issued
under paragraph (1) shall have any legal effect.
``(8) Transition assistance.--Upon request, the Secretary
shall provide--
``(A) technical assistance and information to
employers issued a special certificate under this
subsection for the purposes of--
``(i) transitioning the practices of such
employers to comply with this subsection, as
amended by the Raise the Wage Act; and
``(ii) ensuring continuing employment
opportunities for individuals with disabilities
receiving a special minimum wage rate under
this subsection; and
``(B) information to individuals employed at a
special minimum wage rate under this subsection, which
may include referrals to Federal or State entities with
expertise in competitive integrated employment.''.
(3) Effective date.--The amendments made by this subsection
shall take effect on the date of enactment of this Act.
(b) Publication of Notice.--
(1) Amendment.--Subsection (i) of section 6 of the Fair Labor
Standards Act of 1938 (29 U.S.C. 206), as amended by section
4(b)(2), is further amended by striking ``or section
14(c)(1)(A),''.
(2) Effective date.--The amendment made by paragraph (1)
shall take effect on the day after the date on which the wage
rate described in paragraph (1)(A)(i)(VI) of section 14(c) of
the Fair Labor Standards Act of 1938 (29 U.S.C. 214(c)), as
amended by subsection (a)(1), takes effect.
SEC. 7. GENERAL EFFECTIVE DATE.
Except as otherwise provided in this Act or the amendments made by
this Act, this Act and the amendments made by this Act shall take
effect--
(1) subject to paragraph (2), on the first day of the third
month that begins after the date of enactment of this Act; and
(2) with respect to the Commonwealth of the Northern Mariana
Islands, on the date that is 18 months after the effective date
described in paragraph (1).
SEC. 8. GAO REPORT.
Not later than 1 year after the date of enactment of this Act, the
Comptroller General shall submit to the Education and Labor Committee
of the House of Representatives and the Committee on Health, Education,
Labor, and Pensions of the Senate a report that, with respect to the
Commonwealth of the Northern Mariana Islands--
(1) assesses the status and structure of the economy
(including employment, earnings and wages, and key industries);
and
(2) for each year in which a wage increase will take effect
under subsection (a)(1) or (g)(1) of section 6, section
3(m)(2)(A)(i), or section 14(c)(1)(A) of the Fair Labor
Standards Act of 1938 (29 U.S.C. 201 et seq.), as amended by
this Act, estimates the proportion of employees who will be
directly affected by each such wage increase taking effect for
such year, disaggregated by industry and occupation.
Purpose and Summary
In 1938, President Franklin D. Roosevelt signed into law
the Fair Labor Standards Act of 1938 (FLSA), landmark
legislation that established a minimum hourly wage, set maximum
hours standards, and banned oppressive child labor.\1\ The
minimum wage was established as a living wage--an essential
protection for workers in the wake of the Great Depression when
employers were slashing wages and increasing hours. Congress
intended to prevent employers from competing on the backs of
workers by lowering wage costs, based on the understanding that
the uneven bargaining power between workers and employers could
lead workers to accept wages too low to maintain a decent
standard of living.\2\
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\1\Jonathan Grossman, U.S. Dep't of Labor, Fair Labor Standards Act
of 1938: Maximum Struggle for a Minimum Wage, U.S. Dep't of Labor,
https://www.dol.gov/general/aboutdol/ history/flsa1938.
\2\Brooklyn Sav. Bank v. O'Neil, 324 U.S. 697, 706-07 (1945) (``The
legislative history of the Fair Labor Standards Act shows an intent on
the part of Congress to protect certain groups of the population from
substandard wages and excessive hours which endangered the national
health and well-being and the free flow of goods in interstate
commerce. The statute was a recognition of the fact that due to the
unequal bargaining power as between employer and employee, certain
segments of the population required federal compulsory legislation to
prevent private contracts on their part which endangered national
health and efficiency and as a result the free movement of goods in
interstate commerce.'').
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Congress has legislated increases nine times during the 80
years since the FLSA's inception, effectuating 22 increases in
the federal minimum wage. However, over the last 40 years
Congress has failed to sufficiently raise the federal minimum
wage enough to maintain a standard of living. This, combined
with a 10 year lapse in the last increase in the federal
minimum wage, has severely eroded the value of the minimum
wage. Today's minimum wage workers earn almost $3 per hour
less, adjusted for inflation, than their counterparts over 50
years ago, despite being significantly more productive.\3\ An
individual earning the current federal minimum wage of $7.25 an
hour and working full time earns only $15,080 annually.\4\ This
income level puts a family of two below the federal poverty
level and a family of three or four well below the federal
poverty level ($16,910 a year for a two-person family in 2018;
$21,330 a year for a three-person family; $25,750 for a four-
person family ).\5\ H.R. 582, the Raise the Wage Act (the Act),
would restore the value of the federal minimum wage and ensure
that minimum wage workers no longer earn poverty level wages.
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\3\David Cooper, Raising the Minimum Wage to $15 by 2024 Would Lift
Pay for Nearly 40 Million American Workers 2 (2019), https://
www.epi.org/files/pdf/160909.pdf.
\4\Calculation estimated based on working 40 hours a week and 52
weeks a year.
\5\ U.S. Dep't of Health and Human Servs., 2019 Poverty Guidelines,
https://aspe.hhs.gov/2019-poverty-guidelines.
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H.R. 582 increases the federal minimum wage to $15 by 2024
in six steps. After reaching $15 an hour, the legislation
indexes future increases in the federal minimum wage to median
wage growth to ensure the value of the minimum wage does not
once again erode over time.\6\ The Act guarantees tipped
workers and teenaged workers are paid at least the full federal
minimum wage by gradually repealing the subminimum wage for
tipped workers and the rarely used subminimum wage for teenage
workers. The Act also ends rarely used subminimum wage
certificates for individuals with disabilities.
---------------------------------------------------------------------------
\6\David Cooper, Raising the Minimum Wage to $15 by 2024 Would Lift
Pay for Nearly 40 Million American Workers 14 (2019), https://
www.epi.org/files/pdf/160909.pdf (indexing the minimum wage to median
wages would ensure that low-wage workers share in broad improvements in
U.S. living standards and would help prevent future growth in
inequality between low- and middle-wage workers).
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Gradually raising the federal minimum wage from $7.25 to
$15 by 2024 over six steps will raise wages for nearly 40
million workers. In this way, this legislation will lift
millions of workers out of poverty, stimulate local economies,
and benefit businesses.
Committee Action
110TH CONGRESS
On January 4, 2007, Senator Harry Reid (D-NV) introduced S.
2, the Fair Minimum Wage Act of 2007, which would have raised
the federal minimum wage from $5.15 to $5.85 60 days after
enactment, to $6.55 one year after the effective date, and to
$7.25 two years after the effective date. It had 41 Democratic
cosponsors, one Independent cosponsor, and one Independent
Democrat cosponsor.
On January 5, 2007, Congressman George Miller (D-CA-7)
introduced the House companion bill, H.R. 2, the Fair Minimum
Wage Act of 2007. It had 214 Democratic cosponsors and 8
Republican cosponsors. It was referred to the House Committee
on Education and Labor. The House passed H.R. 2 by a vote of
315-116 on January 10, 2007.
On January 16, 2007, the Senate Committee on Health
Education Labor and Pensions (Senate HELP Committee) held a
hearing on raising the minimum wage titled, ``Economic
Opportunity and Security for Working Families.'' The Senate
HELP Committee heard testimony from Dr. Eileen Applebaum,
Professor and Director, Center for Women and Work at Rutgers
University; Reverend Dr. James Alexander Forbes Jr., Senior
Minister, The Riverside Church; Dr. Jacob Hacker, Associate
Professor, Yale University; and Mrs. Anna Cablik, President,
ANATEK, Inc.
On January 22, 2007, H.R. 2 was brought before the Senate
by unanimous consent. On February 1, 2007 the Senate passed
H.R. 2, as amended, by a vote of 94-3.
On March 27, 2007, Senator Edward M. Kennedy (D-MA) offered
an amendment to H.R. 1591, the U.S. Troop Readiness, Veterans'
Care, Katrina Recovery, and Iraq Accountability Appropriations
Act, 2007, to include the text of the Fair Minimum Wage Act and
separate tax provisions. The amendment passed and H.R. 1591 was
passed by the Senate on March 29, 2007, by a vote of 51-47. On
April 24, 2007, House and Senate conferees agreed to a
conference report, H. Report 110-17, which included the text of
the Kennedy Amendment. The House agreed to the conference
report on April 25, 2007 by a vote of 218-208, and the Senate
agreed to the report the next day by a vote of 51-46. On May 1,
2007, President Bush vetoed H.R. 1591. On May 2, 2007, the
House failed to override the President's veto by a vote of 222-
203.
On May 8, 2007, Congressman David R. Obey (D-WI-7)
introduced H.R. 2206, the U.S. Troop Readiness, Veterans' Care,
Katrina Recovery, and Iraq Accountability Appropriations Act,
2007. The bill was passed by the House on May 10, 2007 by a
vote of 221-205. The bill was then passed by the Senate on a
voice vote on May 17, 2007. The President signed H.R. 2206 on
May 25, 2007. It became Pub. L. No. 110-28.
On December 13, 2007, Congressman Al Green (D-TX-9)
introduced H.R. 4637, the Living American Wage (LAW) Act of
2007. The bill would have required the federal minimum wage to
be adjusted every four years to a level equal to five percent
above the wage level necessary for a full-time worker to earn
above the poverty threshold for a family of three. The bill had
no cosponsors and was referred to the House Committee on
Education and Labor. No further action was taken on this bill.
111TH CONGRESS
On May 21, 2009, Congresswoman Donna Edwards (D-MD-4)
introduced H.R. 2570, the Working for Adequate Gains for
Employment in Services (WAGES) Act. The bill would have raised
the federal tipped minimum wage to 70 percent of the full
federal minimum wage. It had 38 Democratic cosponsors and was
referred to the House Committee on Education and Labor. No
further action was taken on this bill.
On June 25, 2009, Congressman Green (TX-9) introduced H.R.
3041, the Living American Wage (LAW) Act of 2009. The bill
would have required the federal minimum wage to be adjusted
every four years to a level equal to 15 percent above the wage
level required for a full-time worker to earn above the poverty
threshold for a family of two. It had four Democratic
cosponsors and was referred to the House Committee on Education
and Labor. No further action was taken on this bill.
112TH CONGRESS
On February 25, 2011, Congressman Green (TX-9) introduced
H.R. 283, the Living American Wage (LAW) Act of 2011. It had 12
Democratic cosponsors. It was referred to the House Committee
on Education and the Workforce, where it was referred to the
Subcommittee on Workforce Protections. On June 29, 2012
Congressman Green (TX-9) introduced a new version of the bill
as H.R. 6076, the Original Living American Wage (LAW) Act. Both
bills would have required the federal minimum wage to be
adjusted every four years to a level equal to 15 percent above
the wage level required for a full-time worker to earn above
the poverty threshold for a family of two. It had no cosponsors
and was referred to the House Committee on Education and the
Workforce, where it was referred to the Subcommittee on
Workforce Protections. No further action was taken on either
bill.
On March 4, 2011, Congresswoman Edwards (MD-4) introduced
H.R. 631, the Working for Adequate Gains for Employment in
Services (WAGES) Act. It would have raised the federal tipped
minimum wage to 70 percent of the full federal minimum wage. It
had 34 Democratic cosponsors. It was referred to the House
Committee on Education and the Workforce, where it was referred
to the Subcommittee on Workforce Protections. No further action
was taken on this bill.
On July 26, 2012, Senator Tom Harkin (D-IA) and Congressman
Miller (CA-7) introduced S. 3453 and H.R. 6211, the Fair
Minimum Wage Act of 2012, respectively. The bills would have
raised the federal minimum wage to $8.10 three months after
enactment, $8.95 one year after the effective date, and $9.80
two years after the effective date. The bills would also have
indexed future increases in the minimum wage to the Consumer
Price Index for all Urban Wage Earners and Clerical Workers
(CPI-W) and raised the tipped minimum wage to 70 percent of the
full minimum wage. S. 3453 had 15 Democratic cosponsors and one
Independent cosponsor and was referred to the Senate HELP
Committee. H.R. 6211 had 117 Democratic cosponsors and was
referred to the House Committee on Education and the Workforce,
where it was referred to the Subcommittee on Workforce
Protections. No further action was taken on either bill.
113TH CONGRESS
On March 5, 2013, Senator Harkin introduced S. 460, the
Fair Minimum Wage Act of 2013. It would have raised the federal
minimum wage to $8.20 three months after enactment, $9.15 one
year after the effective date, and $10.10 two years after the
effective date. The bill would also have indexed future
increases in the minimum wage to the CPI-W and raised the
tipped minimum wage to 70 percent of the full minimum wage. It
had 32 Democratic cosponsors and one Independent cosponsor. It
was referred to the Senate HELP Committee.
The Senate HELP Committee held a hearing on the Fair
Minimum Wage Act on March 14, 2013. The hearing was titled
``Keeping up with a Changing Economy: Indexing the Minimum
Wage.'' The Senate HELP Committee heard testimony from Mr. Brad
Avakian, Commissioner with the Oregon Bureau of Labor and
Industries; Dr. Arindrajit Dube, Professor of Economics at
University of Massachusetts Amherst; Mr. Lew Price, Managing
Partner of Vintage Vinyl; Ms. Carolle Fleurio, a restaurant
worker; Mr. Melvin Sickler, Auntie Anne's Pretzels and Cinnabon
Franchisee; and Mr. David Rutigigliano, owner of Southport
Brewing Company.
On November 19, 2013, Senator Harkin introduced S. 1737,
the Minimum Wage Fairness Act. The bill had 38 Democratic
cosponsors and one Independent cosponsor. It would have raised
the federal minimum wage to $8.20 one year after passage, $9.15
one year after the effective date, and $10.10 two years after
the effective date. The bill would also have indexed future
increases in the minimum wage to the CPI-W and raised the
tipped minimum wage to 70 percent of the full minimum wage. The
bill was reintroduced by Senator Harkin on April 8, 2014, as S.
2223. On April 30, 2014, Senator Reid's cloture motion to
proceed on the bill failed by a vote of 54-42. Senator Reid
moved to reconsider the bill but later withdrew the motion. No
further action was taken on the bill.
On January 14, 2013, Congressman Green (TX-9) introduced
H.R. 229, the Original Living American Wage (LAW) Act. The bill
would have required the federal minimum wage to be adjusted
every four years to a level equal to 15 percent above the wage
level required for a full-time worker to earn above the poverty
threshold for a family of two. The bill had eight Democratic
cosponsors. It was referred to the House Committee on Education
and the Workforce, where it was referred to the Subcommittee on
Workforce Protections. Congressman Green (TX-9) reintroduced
the bill on June 11, 2014, as H.R. 4839. It had 35 Democratic
cosponsors. No further action was taken on either bill.
On March 6, 2013, Congressman Miller (CA-7) introduced H.R.
1010, the Fair Minimum Wage Act of 2013. It would have raised
the federal minimum wage to $8.20 one year after passage, $9.15
one year after the effective date, and $10.10 two years after
the effective date. The bill would also have indexed future
increases in the minimum wage to the CPI-W and raised the
tipped minimum wage to 70 percent of the full minimum wage. The
bill had 197 Democratic cosponsors. The bill was referred to
the House Committee on Education and the Workforce, where it
was referred to Subcommittee on Workforce Protections.
On March 26, 2013, Congressman Gregg Harper (R-MS-3)
introduced H.R. 831, the Fair Wages for Workers with
Disabilities Act of 2013. The bill would have repealed Section
14(c) of the FLSA and phased out the subminimum wage for
workers with disabilities over three years. The bill had 73
Democratic and 24 Republican cosponsors. The bill was referred
to the House Committee on Education and the Workforce, where it
was referred to the Subcommittee on Workforce Protections. No
further action was taken on this bill.
On April 13, 2013, Congresswoman Edwards (MD-4) introduced
H.R. 650, the Working for Adequate Gains for Employment in
Services (WAGES) Act. It would have raised the federal tipped
minimum wage to 70 percent of the full federal minimum wage.
The bill had 29 Democratic cosponsors. The bill was referred to
the House Committee on Education and the Workforce, where it
was referred to the Subcommittee on Workforce Protections. No
further action was taken on this bill.
On April 23, 2013, Congressman Alan Grayson (D-FL-9)
introduced H.R. 1346, the Catching Up To 1968 Act. It would
have immediately raised the federal minimum wage to $10.50,
indexed future increases in the minimum wage to the Consumer
Price Index for All Urban Consumers (CPI-U), raised the tipped
minimum wage to 70 percent of the full minimum wage, and
eliminated exemptions for some agricultural and domestic
workers. The bill had 19 Democratic cosponsors and was referred
to the House Committee on Education and the Workforce, where it
was referred to the Subcommittee on Workforce Protections. No
further action was taken on this bill.
On December 12, 2013, Congressman John Larson (D-CT-1)
reintroduced the Fair Minimum Wage Act of 2013 as H.R. 3746. It
would have raised the federal minimum wage to $8.50 three
months after enactment, $10.00 a year after the effective date,
and $11.00 two years after the effective date. The bill would
also have indexed future increases in the minimum wage to the
CPI-W and raised the tipped minimum wage to 70 percent of the
full minimum wage. The bill had no cosponsors and was referred
to the House Committee on Education and the Workforce. No
further action was taken on the bill.
On January 28, 2014, Congressman Richard Neal (D-MA-1)
introduced H.R. 3939, the Invest in United States Act of 2014.
It had one Democratic cosponsor and was referred to the House
Committees on Ways and Means, Transportation and
Infrastructure, and Education and the Workforce. It would have
raised the federal minimum wage to $8.20 one year after
passage, $9.15 one year after the effective date, and $10.10
two years after the effective date. The bill would also have
indexed future increases in the minimum wage to the CPI-W and
raised the tipped minimum wage to 50 percent of the full
minimum wage. In the House Committee on Education and the
Workforce, it was referred to the Subcommittee on Workforce
Protections. No further action was taken on this bill.
On February 26, 2014, Congressman Timothy Bishop (D-NY-1)
filed a motion to discharge H.R. 1010 from the House Committee
on Education and the Workforce. The discharge petition gained
196 signatures, short of the 218 signatures needed for further
action.
114TH CONGRESS
On January 6, 2015, Congressman Green (TX-9) introduced
H.R. 122, the Original Living Wage Act of 2015. The bill would
have required the federal minimum wage to be adjusted every
four years to a level equal to 15 percent above the wage level
required for a full-time worker to earn above the poverty
threshold for a family of two. It had 18 Democratic cosponsors
and was referred to the House Committee on Education and the
Workforce, where it was referred to the Subcommittee on
Workforce Protections. The bill was later incorporated into
H.R. 2721, the Pathways Out of Poverty Act of 2015, introduced
by Congresswoman Barbara Lee (D-CA-13) on June 10, 2015. H.R.
2721 was referred to the House Committee on Education and the
Workforce, where it was referred to the Subcommittee on Higher
Education and Workforce Training. No further action was taken
on either bill.
On January 7, 2015, Congressman Harper (MS-3) introduced
H.R. 188, the Transitioning to Integrated and Meaningful
Employment (TIME) Act. The bill would have repealed Section
14(c) of the FLSA and phased out the subminimum wage for
workers with disabilities over three years. The bill had 59
Democratic and 24 Republican cosponsors and was referred to the
House Committee on Education and the Workforce, where it was
referred to the Subcommittee on Workforce Protections. On
August 5, 2015, Senator Kelly Ayotte (R-NH) introduced the
Senate companion, S. 2001, the Transitioning to Integrated and
Meaningful Employment (TIME) Act. The bill was referred to the
Senate HELP Committee. No further action was taken on either
bill.
On April 30, 2015, Senator Patty Murray (D-WA) introduced
S. 1150, the Raise the Wage Act. S. 1150 had 33 Democratic
cosponsors and was referred to the Senate HELP Committee. On
the same day Congressman Robert C. ``Bobby'' Scott (D-VA-3)
introduced the House companion bill, H.R. 2150. H.R. 2150 had
175 Democratic cosponsors and was referred to the House
Committee on Education and the Workforce, where it was referred
to the Subcommittee on Workforce Protections. The bills would
have raised the federal minimum wage to $8.00 30 days after
enactment, $9.00 one year later, $10.00 two years later, $11.00
three years later, and $12.00 four years later. The bill would
also have indexed future increases in the minimum wage to
changes in median wages and eliminated the tipped minimum wage.
No further action was taken on either bill.
On July 22, 2015, Senator Bernard Sanders (I-VT) introduced
S. 1832, the Pay Workers a Living Wage Act. S. 1832 had five
Democratic cosponsors and was referred to the Senate HELP
Committee. On the same day Congressman Keith Ellison (D-MN-5)
introduced the House companion bill, H.R. 3164. H.R. 3164 had
56 Democratic cosponsors and was referred to the House
Committee on Education and the Workforce, where it was referred
to the Subcommittee on Workforce Protections. The bills would
have raised the federal minimum wage to $9.00 in the first year
after passage, $10.50 a year after the effective date, $12.00
two years after the effective date, $13.50 three years after
the effective date, and $15.00 four years after the effective
date. The bill would also have indexed future increases in the
minimum wage to changes in median wages, eliminated the tipped
minimum wage, and increased the youth subminimum wage rate. No
further action was taken on either bill.
On February 9, 2016, Congressman Donald Norcross (D-NJ-1)
introduced H.R. 4508, the Fair Wage Act. The bill would have
raised the federal minimum wage to $8.00 30 days after
enactment, $9.00 one year later, $10.00 two years later, $11.00
three years later, $12.00 four years later, $13.00 five years
later, $14.00 six years later, and $15.00 seven years later,
and would index future increases in the minimum wage to
increases in the CPI-W. It had three Democratic cosponsors. It
was referred to the House Committees on Education and the
Workforce and Ways and Means. In the House Committee on
Education and the Workforce, it was referred to the
Subcommittee on Workforce Protections. No further action was
taken on this bill.
115TH CONGRESS
On January 3, 2017, Congressman Green (TX-9) introduced
H.R. 122, the Original Living Wage Act of 2017. The bill would
have required the federal minimum wage to be adjusted every
four years to a level equal to 15 percent above the wage level
required for a full-time worker to earn above the poverty
threshold for a family of four. It had 10 Democratic cosponsors
and was referred to the House Committee on Education and the
Workforce. No further action was taken on this bill.
On March 7, 2017, Congressman Harper (MS-3) introduced
H.R.1377, the Transitioning to Integrated and Meaningful
Employment Act of 2017. The bill would have repealed Section
14(c) of the FLSA and phased out the subminimum wage for
workers with disabilities over six years. The bill had 37
Democratic and 15 Republican cosponsors. It was referred to the
House Committee on Education and the Workforce. No further
action was taken on this bill.
On May 11, 2018, Congressman Cedric Richmond (D-LA-2)
introduced H.R. 5785, the Jobs with Justice Act of 2018. The
bill would have raised federal minimum wage to $9.25 on the
effective date, $10.10 beginning one year later, $11.00 two
years later, $12.00 three years later, $13.00 four years later,
$13.50 five years later, $14.25 six years later, and $15.00
seven years later. The bill also would have indexed future
increases in the minimum wage to increases in median wages and
eliminated subminimum wages for young workers, workers
receiving tips, and workers with disabilities. The bill had 44
Democratic cosponsors. The bill was referred to the House
Committees on Judiciary; Oversight and Government Reform;
Financial Services; Transportation and Infrastructure; Ways and
Means; Energy and Commerce; Budget; Education and the
Workforce; Science, Space, and Technology; Veterans' Affairs;
Homeland Security; Armed Services; Small Business; House
Administration; and Agriculture. No further action was taken on
this bill.
On May 25, 2017, Senator Sanders (I-VT) introduced S. 1242,
the Raise the Wage Act. S. 1242 had 31 Democratic cosponsors
and was referred to the Senate HELP Committee. On the same day
Congressman Scott (VA-3) introduced the House companion bill,
H.R. 15. H.R. 15 had 171 Democratic cosponsors and was referred
to the House Committee on Education and the Workforce. The
bills would have raised federal minimum wage to $9.25 on the
effective date, $10.10 beginning one year later, $11.00 two
years later, $12.00 three years later, $13.00 four years later,
$13.50 five years later, $14.25 six years later, and $15.00
seven years later. The bills would also have indexed future
increases in the minimum wage to increases median wages and
eliminated the subminimum wages for young workers, tipped
workers, and workers with disabilities. No further action was
taken on either bill.
116TH CONGRESS
On January 3, 2019, Congressman Green (TX-9) introduced
H.R. 122, the Original Living Wage Act with no cosponsors. The
bill would have required the federal minimum wage to be
adjusted every four years to a level equal to 25.5 percent
above the wage level required for a full-time worker to earn
above the poverty threshold for a family of four. It was
referred to the House Committee on Education and Labor. No
further action has been taken on this bill.
On January 16, 2019, Senator Sanders (I-VT) introduced
S.150, the Raise the Wage Act. S. 150 was introduced with 30
cosponsors and was referred to the Senate HELP Committee. No
further action has been taken on this bill. On the same day
Congressman Scott (VA-3) introduced the House companion bill,
H.R. 582.
H.R. 582 has 205 cosponsors, including 188 original
cosponsors. The bill was referred to the House Committee on
Education and Labor (hereinafter, the Committee). On February
7, 2019, the Committee held a legislative hearing entitled,
``Gradually Raising the Minimum Wage to $15: Good for Workers,
Good for Businesses, and Good for the Economy'' (hereinafter,
the February 7th hearing). Witnesses included Dr. William
Spriggs, Professor at Howard University and Chief Economist for
the AFL-CIO; Mr. Terrence Wise, a shift manager at McDonald's;
Dr. Douglas Holtz-Eakin, President of the American Action
Forum; Dr. Ben Zipperer, Economist at the Economic Policy
Institute; Ms. Vanita Gupta, President and CEO of the
Leadership Conference on Civil and Human Rights; Ms. Simone
Barron, restaurant worker at a full service restaurant; Ms.
Kathy Eckhouse, owner of La Quercia; Dr. Michael Strain,
Resident Scholar and Director of Economic Policy Studies at the
American Enterprise Institute; Dr. Michael Reich, Professor of
Economics at University of California Berkeley; and Mr. Paul
Brodeur, Massachusetts State Representative.
On Wednesday, March 6, 2019, the Committee met for a full
committee markup of H.R. 582, the Raise the Wage Act. The
Committee adopted an amendment in the nature of a substitute
(ANS) offered by Congressman Scott (VA-3), Chairman of the
Committee, and reported the bill favorably to the House of
Representatives by a vote of 28-20.
The ANS incorporates the provisions of H.R. 582 with the
following modifications:
It amends Section 4 to clarify H.R. 582's
language to fully repeal Section 6(g) of the FLSA by
striking FLSA subsections 6(g)(2)-(5). These provisions
were added to the FLSA by Pub. L. No. 114-187, the
Puerto Rico Oversight, Management, and Economic
Stability Act (PROMESA). PROMESA increased the age
under which a worker in Puerto Rico may be paid the
youth minimum wage from 20 to the age of 25. The law
also allowed the Governor of Puerto Rico to increase
the allowable length of time that an employer can pay
the youth subminimum wage for up to five years. The ANS
removes these provisions from the underlying statute.
It amends Section 7 to set the effective
date in the Commonwealth of the Northern Mariana
Islands (CNMI) as 18 months after the bill's general
effective date.
It adds Section 8, requiring the Comptroller
General (Government Accountability Office or GAO) to
review the economic conditions in the CNMI, estimate
the proportion of employees directly affected by such
wage increase (disaggregated by industry and
occupation), and submit a report to Congress within one
year after enactment.
The following amendments to the ANS were offered, but not
adopted:
Congressman Ben Cline (R-VA-6) offered an
amendment to prohibit minimum wage increases under the
Act from taking effect if, during the year prior to the
effective date: (1) monthly employment growth is
negative for 3 consecutive months; (2) total non-farm
unemployment increases by more than 0.25 percent in a
month; or (3) the national unemployment rate is above 6
percent in a month. The amendment failed by a vote of
19-28.
Congressman Dan Meuser (R-PA-9) offered an
amendment to exclude enterprises with fewer than ten
employees or less than $1 million in annual gross
volume of sales from minimum wage increases under the
Act. The amendment failed by a vote of 21-24.
Congressman Rick Allen (R-GA-12) offered an
amendment to prohibit minimum wage increases under the
Act unless the unemployment rate for individuals aged
16 to 24 is below 8 percent for each of the 12 months
prior to the effective dates for such increases. The
amendment failed by a vote of 20-28.
Congressman Lloyd Smucker (R-PA-11) offered
an amendment to prohibit state and local governments
from adopting a minimum wage requirement if an employer
is exempt from such a requirement for employees covered
by a bona fide collective bargaining agreement. The
amendment failed by a vote of 20-28.
Congresswoman Virginia Foxx (R-NC-5),
Ranking Member of the Committee, offered an amendment
to strike provisions setting the effective date in the
CNMI. The amendment failed by a vote of 20-28.
Congressman Ron Wright (R-TX-6) offered an
amendment to prohibit the Act from taking effect unless
(1) the Comptroller General (Government Accountability
Office or GAO) submits a report to Congress, no later
than 1 year after the date of enactment, on the Act's
impact on employment and automation, and (2) such
report finds that the Act will not result in the loss
of more than 500,000 jobs due to automation. The
amendment failed by a vote of 21-27.
Congressman Phil Roe (R-TN-1) offered an
amendment to prohibit the Act from taking effect unless
(1) the Comptroller General (Government Accountability
Office or GAO) submits a report to Congress, no later
than 1 year after the date of enactment, on the Act's
impact on areas with a median hourly wage less than
$18, and (2) such report finds that the Act will not
result in the loss of more than 200,000 jobs in such
areas. The amendment failed by a vote of 20-27.
Committee Views
The Committee is committed to restoring the value of the
federal minimum wage and ensuring that all workers, regardless
of where they work, are able to earn a fair day's pay for a
fair day's work. Gradually raising the minimum wage is good for
workers, who experience a better standard of living; good for
businesses, which benefit from an expanded customer base and
less worker turnover; and good for the economy, which is
strongest when policy reduces poverty and promotes a thriving
middle class.
THE HISTORY OF THE MINIMUM WAGE UNDER THE FAIR LABOR STANDARDS ACT
The Federal minimum wage was established as a living wage with workers
of color excluded
On June 25, 1938, President Roosevelt signed the FLSA,
landmark legislation that established a minimum hourly wage,
set maximum hours standards, and banned oppressive child
labor.\7\ Passed as part of the New Deal, this legislation was
enacted to ensure that all workers had a minimum living
standard. In 1937, President Roosevelt declared that ``[a]
self-supporting and self-respecting democracy can plead no
justification for the existence of child labor, no economic
reason for chiseling workers' wages or stretching workers'
hours.''\8\
---------------------------------------------------------------------------
\7\Jonathan Grossman, Fair Labor Standards Act of 1938: Maximum
Struggle for a Minimum Wage, 101 Monthly Labor Review 22-30 (1978),
available at https://www.jstor.org/stable/41840777.
\8\Id.
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The minimum wage was established as a living wage as an
essential protection for workers in the wake of the Great
Depression when employers were slashing wages and increasing
hours. Recognizing rampant abuses of workers, President
Roosevelt quipped in 1933, ``[n]o business which depends for
existence on paying less than living wages to its workers has
any right to continue in this country.''\9\ He went on to
clarify, ``by `business' I mean the whole of commerce as well
as the whole of industry; by workers I mean all workers, the
white-collar class as well as the men in overalls; and by
living wages, I mean more than a bare subsistence level--I mean
the wages of decent living.''\10\ Five years before he signed
the FLSA into law, President Roosevelt made it apparent that
the minimum wage was never intended to be merely an entry-level
wage, but rather a floor at which Americans could be paid and
still live comfortably.
---------------------------------------------------------------------------
\9\ President Franklin D. Roosevelt, Statement the National
Industrial Recovery Act (June 16, 1933), Franklin D. Roosevelt
Presidential Library, http://docs.fdrlibrary.marist.edu/odnirast.html.
\10\Id.
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The 1938 House Committee on Labor further elucidated this
need for the minimum wage to be a living wage:
Unless the wages paid by private employers are
sufficient to maintain the bare cost of living, [sic]
demands [on the state and federal government for work
and work relief] will necessarily continue. The payment
of oppressive wages is not only detrimental to
interstate commerce and to the health and well-being of
employees of employers engaged in interstate commerce,
but also casts a direct burden for the support of such
employees upon Government. Government cannot
indefinitely provide what is in effect a subsidy for
such employers--a subsidy made necessary by the
inability of the great majority of such employers to
maintain fair labor standards in the face of wage cuts
by chiseling competitors.\11\
---------------------------------------------------------------------------
\11\H. Rept. No. 75-2182, at 6 (1938).
Although the federal minimum wage was established to ensure
workers had livable wages, unfortunately, as first passed, the
FLSA contained broad exclusions aimed at depriving workers of
color of minimum wage protections. During debate on the FLSA,
some Southern Members of Congress expressed their opposition to
a federal minimum wage on the ground that it threatened to
equalize wages between African American and White laborers.\12\
For example, Congressman Mark Wilcox (D-FL-4) stated during
floor debate:
---------------------------------------------------------------------------
\12\Sean Farhang & Ira Katznelson, The Southern Imposition:
Congress and Labor in the New Deal and Fair Deal 14 (2005), https://
gspp.berkeley.edu/assets/uploads/research/pdf/article_4.pdf.
We may rest assured, therefore, that when we turn
over to a federal bureau or board the power to fix
wages, it will prescribe the same wage for the Negro
that it prescribes for the [W]hite man. Now, such a
plan might work in some sections of the United States
but those of us who know the true situation know that
it just will not work in the South.\13\
---------------------------------------------------------------------------
\13\ Id.
As a compromise to secure votes from Southern lawmakers,
the FLSA, as passed in 1938, excluded industries in which
people of color were the majority of the workforce, including
agriculture and domestic work. In 1930, approximately 58
percent of Black workers in the South were agricultural or
domestic workers.\14\ Southern lawmakers understood that, by
carving out agricultural and domestic workers from the FLSA,
they undermined the leveling effects of a federal minimum and
could thereby ``maintain the relation of inequality between the
races in massive sectors of southern labor markets in which
blacks were densely concentrated.''\15\ While many of the FLSA
exclusions for domestic and agriculture workers have since been
removed, the effects of these exclusions remain.
---------------------------------------------------------------------------
\14\Sean Farhang & Ira Katznelson, The Southern Imposition:
Congress and Labor in the New Deal and Fair Deal 15 (2005), https://
gspp.berkeley.edu/assets/uploads/research/pdf/article__4.pdf.
\15\ Id.
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Past increases to the minimum wage were more frequent
Since 1938, Congress has passed legislation that increases
the federal minimum wage nine times--four of those in the last
40 years.\16\ Congressional action has effectuated a federal
minimum wage increase 22 times. Up until 2009, the most recent
year the minimum wage increased, an average of three years
passed between minimum wage adjustments. As shown in Table 1,
for only seven of the 22 increases in the last 80 years has
more than five years passed between minimum wage increases.
Because Congress has not raised the federal minimum wage, on
June 16, 2019, the nation entered the longest period of time
that the federal minimum wage has gone unchanged in the law's
80-year history.
---------------------------------------------------------------------------
\16\David Cooper, Raising the Minimum Wage to $15 by 2024 Would
Lift Pay for Nearly 40 Million American Workers 2 (2019), https://
www.epi.org/files/pdf/160909.pdf.
---------------------------------------------------------------------------
Congress last legislated an increase in the federal minimum
wage in 2007 during the George W. Bush Administration with
Democratic control of the House and Senate. H.R. 2, The Fair
Minimum Wage Act of 2007, was introduced by then-Chairman of
the House Education and Labor Committee, Congressman George
Miller (D-CA-11), with 214 original cosponsors.\17\ H.R. 2
passed the House as a stand-alone bill on January 10, 2007 by a
vote of 315-116. Notably, 82 Republicans voted in favor of the
bill.\18\ Ultimately, the provisions in the bill were included
in Pub. L. No. 110-28, the U.S. Troop Readiness, Veterans'
Care, Katrina Recovery, and Iraq Accountability Appropriations
Act, 2007, enacted May 25, 2007. Pursuant to the legislation,
the federal minimum wage increased over three years from $5.15
to $5.85 in 2007, to $6.55 in 2008, and to $7.25 in 2009 (an
increase of $0.70 per hour each year). The minimum wage has
remained at $7.25 per hour since July 24, 2009.\19\
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\17\Fair Minimum Wage Act of 2007, H.R. 2, 110th Cong. (2007).
\18\153 Cong. Rec. H260 (2007) (daily ed. Jan. 10, 2007) (Roll Call
18).
\19\29 U.S.C. Sec. 206(a)(1)(C).
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Despite congressional inaction, 29 states and the District
of Columbia have minimum wages higher than the federal minimum
wage (as of April 2019). Additionally, 41 localities have
minimum wages higher than their state's minimum wage. Since
2014, 25 states and the District of Columbia have changed their
minimum wage laws. Seven of these states--California,
Connecticut, Illinois, Massachusetts, New Jersey, New York, and
Maryland--have enacted laws phasing in a $15 per hour minimum
wage. On January 1, 2019, nineteen states raised their minimum
wages through previously approved legislation, newly approved
ballot initiatives, or automatic inflationary adjustments.
These increases will provide an estimated 5.2 million workers
with an additional $5.3 billion in wages over the course of
2019.\21\
---------------------------------------------------------------------------
\21\David Cooper, Over 5 Million Workers Will have Higher Pay on
January 1 Thanks to State Minimum Wage Increases, Working Econs. Blog
(Dec. 26, 2018, 5:00 AM), https://www.epi.org/blog/over-5-million-
workers-will-have-higher-pay-on-january-1-thanks-to-state-minimum-wage-
increases/.
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THE DECLINING VALUE OF THE FEDERAL MINIMUM WAGE HAS CONTRIBUTED TO WAGE
STAGNATION
Low-wage workers comprise a significant portion of the U.S.
workforce; this group of workers includes those who earn the
minimum wage or less, as well as those who earn poverty-level
and near-poverty-level wages. According to the BLS, 1.8 million
workers, or 2.3 percent of all workers, earn wages at or below
the federal minimum wage (some earn less than the minimum due
to FLSA coverage exemptions).\22\ The majority (51 percent) of
these workers are over the age of 25, overwhelmingly women (60
percent), and disproportionately workers of color (nearly 40
percent).\23\ Beyond those earning the federal minimum wage are
the one in nine U.S. workers who are paid wages that leave them
in poverty, even when working full time and year-round.\24\
There is no precise definition of a low wage worker, but as Dr.
Zipperer testified at the February 7th hearing, ``[m]ore
broadly low-wage workers today constitute a large portion of
the workforce. About [sic] 25 percent of all workers earned $13
or less per hour in 2018 and the vast majority of them would
benefit from a minimum wage increase to $15 by 2024.''\25\
---------------------------------------------------------------------------
\22\Bureau of Labor Statistics Rep. No. 1072, Characteristics of
Minimum Wage Workers 2017 1 (2018), https://www.bls.gov/opub/reports/
minimum-wage/2017/pdf/home.pdf.
\23\Id.
\24\David Cooper, One in nine U.S. workers are paid wages that can
leave them in poverty, even when working full time, Econ. Snapshot
(June 15, 2018), https://www. epi. org/publication/one-in-nine-u-s-
workers-are-paid-wages-that-can-leave-them-in-poverty-even-when-
working-
full-time/.
\25\Gradually Raising the Minimum Wage to $15: Good for Workers,
Good for Businesses, and Good for the Economy Before H. Comm. on Educ.
and Labor, 116th Cong. (2019) (written testimony of Ben Zipperer,
Economist at the Econ. Policy Inst., at 3) [Hereinafter ``Zipperer
Testimony''].
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The federal minimum wage impacts low-wage workers by
setting a wage floor. For low-wage workers, the institution of
a federal minimum wage may be one of the few mechanisms
providing upward pressure on their wages. This is especially
true where a decline of union membership has meant a smaller
percentage of the U.S. workforce has its wages set through
collective bargaining. Union density has decreased from 33.2
percent in 1956 to 10.7 percent of the workforce in 2017,\26\
limiting workers' bargaining power.
---------------------------------------------------------------------------
\26\Josh Bivens et al., How Today's Unions Help Working People,
Econ. Policy Inst. 9 (2017), https://www.epi.org/publication/how-
todays-unions-help-working-people-giving-workers-the-power-to-improve-
their-jobs-and-unrig-the-economy/; Bureau of Labor Statistics, Union
Membership (Annual) News Release, Econ. News Release (Jan. 18, 2019,
10:00 AM), https://www.bls.gov/news.release/union2.htm.
---------------------------------------------------------------------------
In the 1980s, the real value of the minimum wage dropped as
federal increases failed to keep up with inflation. Federal
increases in the 1990s also failed to compensate for this
erosion. Even the three consecutive $0.70 per hour increases
implemented in 2007, 2008, and 2009 failed to restore the
inflation-adjusted value of the minimum wage to its pre-1980
levels. Since the last minimum wage increase to $7.25 an hour
in 2009, the value of the minimum wage has fallen by 17
percent.\27\ This means that ``[i]n 2018, a worker earning
$7.25 per hour needs an extra 41 working days more than eight
weeks--just to take home the same pay as she did in a single
year when the federal minimum wage was last increased.''\28\
---------------------------------------------------------------------------
\27\David Cooper, Congress has never let the federal minimum wage
erode for this long, Econ. Snapshot (Jun. 17, 2019), https://
www.epi.org/publication/congress-has-never-let-the-federal-minimum-
wage-erode-for-this-long/.
\28\Rachel West, March 1 is Minimum Wage Workers' Equal Pay Day,
Ctr. for Am. Progress (Mar. 1, 2018, 10:00 AM), https://
www.americanprogress.org/issues/poverty/news/2018/03/01/447359/march-1-
minimum-wage-workers-equal-pay-day/.
---------------------------------------------------------------------------
The minimum wage has also failed to keep up with increases
in worker productivity. Between 1973 and 2017, workers'
productivity grew by 77 percent, while the typical worker's
hourly wages grew by just 12 percent in real terms.\29\ The
widening gap between how much workers produce and how much they
are paid is one major factor contributing to the historic
levels of income inequality. Had the minimum wage kept pace
with worker productivity, as it once did, it would be more than
$20 per hour today.\30\ Had the value of the federal minimum
wage in 1968, its historical high point, simply grown at the
rate of average wages, it would be approximately $12 per hour
today.\31\
---------------------------------------------------------------------------
\29\Econ. Policy Inst., The Productivity-Pay Gap, https://
www.epi.org/productivity-pay-gap/.
\30\Zipperer Testimony at 2 (See 45:15).
\31\Economic Policy Institute's analysis of the Fair Labor
Standards Act and amendments. Based on the average hourly wages of
production nonsupervisory workers from the Bureau of Labor statistics
Current Employment Statistics.
---------------------------------------------------------------------------
As a direct result of the decline in the value of the
minimum wage, hourly pay for workers earning the federal
minimum wage has declined in real terms since 1979. Today's
minimum wage workers earn nearly $3 an hour less, adjusted for
inflation, than their counterparts over 50 years ago earned,
despite being significantly more productive.\32\ This means
workers are making 29 percent less in real terms than what
their counterparts made nearly 50 years ago.\33\
---------------------------------------------------------------------------
\32\Cooper, supra note 3, at 2.
\33\Zipperer Testimony at 2.
---------------------------------------------------------------------------
The widening gap between the value of the minimum wage and
the median wage is another indicator of growing income
inequality. At its peak in inflation-adjusted terms, the 1968
minimum wage ($1.60 per hour) was about half of the typical
hourly worker's wages at that time (the median hourly wage in
1968 was about $20 in 2018 dollars and the minimum wage was
about $10). Today, at $7.25 an hour, the minimum wage is only
about one-third of the median hourly wage.\34\ This widening
gap shows the extent to which low-wage workers are losing
ground in today's economy. As Dr. Spriggs testified at the
February 7th hearing, citing a David Autor and Alan Manning
report, a significant portion of wage inequality that developed
during the 1980s between workers at the bottom ten percent of
the wage distribution and median wage earners was because the
federal minimum wage was unchanged between 1981 and 1990.\35\
---------------------------------------------------------------------------
\34\Cooper, supra note 3, at 6 (For full-time, full-year workers).
\35\Gradually Raising the Minimum Wage to $15: Good for Workers,
Good for Businesses, and Good for the Economy Before H. Comm. on Educ.
and Labor, 116th Cong. (2019) (written testimony of William E. Spriggs,
Professor of Economics at Howard University and Chief Economist to the
AFL-CIO, at 6) [Hereinafter ``Spriggs Testimony'']; See also David H.
Autor et al., The Contribution of the Minimum Wage to US Wage
Inequality over Three Decades: A Reassessment, 8 Am. Econ. Journal:
Applied Econs. 58 (2016).
---------------------------------------------------------------------------
The declining value of the minimum wage and slow wage
growth for low-wage workers have left millions of workers
economically insecure, undermining the minimum wage's original
purpose as a living wage. As Dr. Spriggs testified at the
February 7th hearing:
Since 1980, the once strong relationship between an
expanding economy, falling unemployment and lower
poverty levels became weak. Improvements in the living
standards of lower income working families no longer
comes from work, but from transfers, primarily through
Medicaid and Medicare. The expansion of the 1980s made
little progress on lowering poverty, as did the
expansion from 2001 to 2008.\36\
---------------------------------------------------------------------------
\36\Spriggs Testimony at 6.
An individual earning the federal minimum wage of $7.25 an
hour and working full time earns only $15,080 pre-tax
annually.\37\ This income level would put a family of two below
the federal poverty level ($16,910 for a two-person family in
2018).\38\
---------------------------------------------------------------------------
\37\Based on working 40 hours a week and 52 weeks a year.
\38\U.S. Dep't of Health and Human Servs., 2019 Poverty Guidelines,
https://aspe.hhs.gov/2019-poverty-guidelines.
---------------------------------------------------------------------------
Persistently low wages have left working people in
precarious economic situations. An estimated 41 percent of
American adults cannot afford a $400 emergency\39\ and minimum
wage workers cannot afford a two-bedroom apartment in any part
of the country.\40\ Mr. Wise testified about his experience
earning the minimum wage at the February 7th hearing:
---------------------------------------------------------------------------
\39\Board of Governors of the Federal Reserve System, Report on the
Economic Well-Being of U.S. Households in 2017 21 (2018), https://
www.federalreserve.gov/publications/files/2017-report-economic-well-
being-us-households-201805.pdf.
\40\Nat'l Low Income Housing Coal., Out of Reach: The High Cost of
Housing 1 (2018), https://reports.nlihc.org/sites/default/files/oor/
OOR_2018.pdf; Tracy Jan, A Minimum-Wage Worker Can't Afford a 2-Bedroom
Apartment Anywhere in the U.S., Washington Post (Jun. 13, 2018),
https://www.washingtonpost.com/news/wonk/wp/2018/06/13/a-minimum-wage-
worker-cant-afford-a-2-bedroom-apartment-anywhere-in-the-u-s/
?utm_term=.4689024537a1.
[I]t is frightening, because we are truly one missed
paycheck away from being homeless. So there is no such
thing as being sick or having to call in or a family
emergency. Refrigerator breaking down, car breaks, any
of that going out is catastrophic, basically, for me
and my family. So it is just it is all pure luck, you
know, hoping everything is okay every day.\41\
---------------------------------------------------------------------------
\41\Gradually Raising the Minimum Wage to $15: Good for Workers,
Good for Businesses, and Good for the Economy Before H. Comm. on Educ.
and Labor, 116th Cong. (2019) (written testimony of Terrence Wise,
Shift Manager, McDonalds) [Hereinafter Wise Testimony]. See also House
Comm. on Educ. and Labor, Gradually Raising the Minimum Wage to $15:
Good for Workers, Good for Business, Good for the Economy, YouTube
(Feb. 7, 2019), https://www.youtube.com/watch?v=JDGkim7aaHI (statement
by Mr. Wise at 3:08:20).
---------------------------------------------------------------------------
H.R. 582 WOULD RESTORE THE VALUE OF THE MINIMUM WAGE THROUGH GRADUAL
STEPS IN LINE WITH HISTORICAL INCREASES
Gradually raising the minimum wage to $15 by 2024 pursuant
to H.R. 582 is a key step toward restoring the value of the
minimum wage and correcting past failures to increase it. H.R.
582 would restore the minimum wage, putting it 28 percent above
the peak minimum wage in 1968. The Act would finally ensure the
minimum wage is no longer a poverty level wage.\42\ As Dr.
Zipperer explained at the February 7th hearing, ``[a] $15 wage
in 2024 would have 28 percent more purchasing power than the
minimum wage did at its 1968 high point, but over that time
period, the economy's potential for higher living standards, as
reflected in labor productivity, will have grown by 119
percent.''\43\ H.R. 582 would also lift the minimum wage's
share of the full-time, full-year median wage to anywhere
between 56 to 58 percent and finally begin to close the gap
between typical workers and minimum wage workers.\44\
---------------------------------------------------------------------------
\42\The federal poverty guidelines are adjusted at the rate of
inflation each year using the CPI-U. Thus, the poverty line will be the
same as today in real terms ($16,910 for a family of two) as in 2024.
Meanwhile, today's real value of a $15 minimum wage in 2024 is
approximately $13, resulting in earnings of about $27,040 per year for
full-time work; See also U.S. Dep't of Health and Human Servs.,
Frequently Asked Questions Related to Poverty Guidelines and Poverty,
https://aspe.hhs.gov/frequently-asked-questions-related-poverty-
guidelines-and-poverty.
\43\Zipperer Testimony at 3.
\44\David Cooper, Raising the Minimum Wage to $15 by 2024 Would
Lift Pay for Nearly 40 Million American Workers 7 (2019), https://
www.epi.org/files/pdf/160909.pdf.
---------------------------------------------------------------------------
H.R. 582 restores the value of the minimum wage through
increases well within the ranges of past increases. As Table 1
demonstrates, year-over-year increases in the federal minimum
wage have ranged from 5 percent in 1975 to 47 percent in 1950.
Historically, the average one-year increase to the minimum wage
was 14 percent. As Table 1 shows, 17 of the 22 increases were
greater than 9 percent, which is the smallest one-year
percentage increase (in year 2024) under H.R. 582. For the
seven times in the last 80 years where more than five years
passed between minimum wage increases, the average one-year
increase was 17 percent. The largest one-year percentage
increase under H.R. 582 would be 18 percent in 2019.
RAISING THE FEDERAL MINIMUM WAGE IMPROVES WORKERS' ECONOMIC SECURITY
WITH LITTLE TO NO NEGATIVE IMPACT ON EMPLOYMENT
Minimum wage increases raise workers' income, narrow race and gender
pay gaps, and reduce poverty rates
Raising the federal minimum wage broadly increases family
incomes for low-wage workers. Economists at the University of
Massachusetts\45\ and the U.S. Census Bureau found that low-
income families experienced large and economically meaningful
earnings and income boosts after minimum wage increases.\46\
They found that these income-increasing effects grew in
magnitude up to five years after the policy change.\47\
---------------------------------------------------------------------------
\45\Arindrajit Dube, Minimum Wages and the Distribution of Family
Incomes 3 (2018), https://equitablegrowth.org/wp-content/uploads/2018/
11/11162018-WP-MINIMUM-WAGES-AND-FAMILY-INCOMES.pdf.
\46\Kevin Rinz & John Voorhies, The Distributional Effects of
Minimum Wages: Evidence from Linked Survey and Administrative Data 5
(2018), https://www.census.gov/content/dam/Census/library/working-
papers/2018/adrm/carra-wp-2018-02.pdf.
\47\Id.
---------------------------------------------------------------------------
Raising the federal minimum wage also impacts gender and
racial pay gaps. Six in ten workers earning the current federal
minimum wage are women.\48\ Women on average earn 80 cents for
every dollar earned by their male counterparts.\49\ Evidence
from the states shows that raising the minimum wage can have an
impact on the gender pay gap. In states where the minimum wage
is at or above $8.25 an hour, the gender wage gap is 41 percent
smaller than states where the minimum wage is lower.\50\
Similarly, analysts estimate that today, there is a 25 percent
gap between the average annual earnings of African American and
White workers.\51\ Researchers found that the 1966 expansion of
federal minimum wage protections to industries predominantly
filled with workers of color, which resulted in a wage increase
for many of these workers, reduced the black-white earnings gap
by 20 percent.\52\
---------------------------------------------------------------------------
\48\Nat'l Women's Law Ctr., The Raise the Wage Act: Boosting
Women's Paychecks and Advancing Equal Pay 1 (2019), https://nwlc-
ciw49tixgw5lbab.stackpathdns.com/wp-content/uploads/2019/02/Raise-the-
Wage-Act-Boosting-Womens-Pay-Checks.pdf.
\49\Am. Assoc. of Univ. Women, The Simple Truth About the Gender
Pay Gap 5 (2018), https://www.aauw.org/aauw_check/pdf_download/
show_pdf.php?file=The_Simple_Truth.
\50\Nat'l Women's Law Ctr., Higher Minimum Wages Promote Equal Pay
for Women 1 (2017), https://nwlc.org/wp-content/uploads/2017/04/2017-
Higher-State-Minimum-Wages-Promote-Equal-Pay-for-Women.pdf.
\51\Elora Derenoncourt & Claire Montialoux, Minimum Wages and
Racial Inequality 1 (2018), https://scholar.harvard.edu/files/
elloraderenoncourt/files/montialoux_jmp_2018.pdf.
\52\Id.
---------------------------------------------------------------------------
Higher minimum wages also reduce poverty rates. For every
10 percent increase in the minimum wage, research finds a 5
percent reduction in the nonelderly poverty rate over the long
run (three or more years).\53\ These findings suggest that if
the United States had a $12 national minimum wage in 2017,
there would be about 6.2 million fewer individuals living in
poverty today.\54\ Furthermore, the most comprehensive
assessment of the effect of the minimum wage on family incomes
finds that every 10 percent increase in the inflation-adjusted
minimum wage reduces Black and Hispanic poverty rates by
approximately 10.9 percent.\55\
---------------------------------------------------------------------------
\53\Arindrajit Dube, Minimum Wages and the Distribution of Family
Incomes 23 (2018), https://equitablegrowth.org/wp-content/uploads/2018/
11/11162018-WP-MINIMUM-WAGES-AND-FAMILY-INCOMES.pdf; Washington Ctr.
for Equitable Growth, Minimum wages and the distribution of family
incomes in the United States (April 26, 2017), https://
equitablegrowth.org/minimum-wages-and-the-distribution-of-family-
incomes-in-the-us/.
\54\Id at 28.
\55\Ben Zipperer, The Erosion of the Federal Minimum Wage has
Increased Poverty, Especially for Black and Hispanic Families, Econ.
Snapshot (Jun. 13, 2018), https://www.epi.org/publication/the-erosion-
of-the-federal-minimum-wage-has-increased-poverty-especially-for-black-
and-hispanic-families/.
---------------------------------------------------------------------------
Analysis shows that gradually raising the federal minimum
wage to $15 by 2024 under H.R. 582 would increase wages for
39.7 million working people (26.6 percent of the workforce) and
produce $118 billion in additional wages through 2024.\56\ It
would directly lift the wages of 28.1 million workers.\57\ For
those 28.1 million workers, this translates into a nearly
$4,000 increase in annual wage income, a 20.9 percent
raise.\58\ Another 11.6 million workers would indirectly
benefit from a spillover effect as employers increase wages for
workers making slightly more than $15 in order to attract and
retain workers.\59\
---------------------------------------------------------------------------
\56\David Cooper, Raising the Minimum Wage to $15 by 2024 Would
Lift Pay for Nearly 40 Million American Workers 2 (2019), https://
www.epi.org/files/pdf/160909.pdf.
\57\Id. at 3.
\58\Id.
\59\Id. at 9.
---------------------------------------------------------------------------
Millions of full-time workers between the ages of 25 and
54, many of whom are the primary breadwinners for their
families, would see a raise under H.R. 582.\60\ Ninety percent
of the workers who would see a raise are over the age of 20 and
more than half of all affected workers are prime-age workers
between the ages of 25 and 54.\61\ In fact, among affected
workers, the average age is 35 years old.\62\ Women, though not
quite a majority of the overall workforce, represent 57.9
percent of workers affected by a $15 minimum wage in 2024 under
H.R. 582.\63\ H.R. 582 would have a particular impact on
workers of color. Nearly 36 percent of working women of color
would be impacted by a $15 minimum wage in 2024,\64\ including
African American and Latina women, who are overrepresented in
low-paying jobs\65\ and most likely to be paid the lowest
wages.\66\ Thirty-eight percent of all African American workers
and 33.4 percent of all Hispanic workers will be impacted.\67\
---------------------------------------------------------------------------
\60\Id. at 11.
\61\Id. at 9.
\62\Id.
\63\Id.
\64\David Cooper, Raising the Minimum Wage to $15 by 2024 Would
Lift Pay for Nearly 40 Million American Workers 9 (2019), https://
www.epi.org/files/pdf/160909.pdf.
\65\Irene Trung et al., The Growing Movement for $15 1 (2015),
http://www.nelp.org/content/uploads/Growing-Movement-for-15-
Dollars.pdf.
\66\Id.
\67\David Cooper, Raising the Minimum Wage to $15 by 2024 Would
Lift Pay for Nearly 40 Million American Workers 9-10 (2019), https://
www.epi.org/files/pdf/160909.pdf.
---------------------------------------------------------------------------
Workers with families who will benefit from a $15 minimum
wage in 2024 are typically the primary breadwinner for their
families; they earn an average of 51.9 percent of their
family's total income.\68\ The effects for single working
parents are more dramatic: ``43.0 percent of all single mothers
would receive a raise if the federal minimum wage were
increased to $15 by 2024, as would nearly a third (29.4
percent) of single fathers.''\69\ The parents of 14.4 million
children across the United States, nearly one-fifth (19.6
percent) of all U.S. children, would see increased wages under
H.R. 582.\70\
---------------------------------------------------------------------------
\68\Id. at 11.
\69\Id. at 12.
\70\David Cooper, Raising the Minimum Wage to $15 by 2024 Would
Lift Wages for Nearly 40 Million American Workers 12 (2019), https://
www.epi.org/files/pdf/160909.pdf.
---------------------------------------------------------------------------
Past minimum wage increases have had little or no negative impact on
employment
The most prevalent and consistent criticism of raising the
minimum wage is that it will lead to job loss, or negative
employment effects. However, neither the evidence nor the
experiences from recent state and local increases support this
claim. As Dr. Zipperer testified at the February 7th hearing,
``the weight of recent evidence shows that minimum wages have
worked exactly as intended, by raising wages without
substantial negative consequences on employment.''\71\ A 2019
paper, considered to be the most important economic study on
the minimum wage since the 1990s, analyzed 138 state-level
minimum wage increases:\72\ ``[W]e studied all major state-
level minimum wage increases between 1979 and 2016 and found
they significantly raised wages without reducing the employment
of low-wage workers. Notably, we also found the same positive
outcomes for even the highest minimum wages in our study.''\73\
Additionally, researchers have found that requiring that tipped
workers be paid the full regular minimum wage has had no
discernable effect on leisure and hospitality employment growth
in the seven states where tipped workers receive the full,
regular minimum wage.\74\ Further, the evidence from six large
cities that were early adopters of higher minimum wages
(Chicago, the District of Columbia, Oakland, San Francisco, San
Jose, and Seattle) shows that following pay increases for
workers in food service, employment did not change, and
employers did not replace these workers with more-educated
workers.\75\
---------------------------------------------------------------------------
\71\Zipperer Testimony at 4.
\72\Doruk Cengiz et al., The Effect of Minimum Wages on Low-Wage
Jobs: Evidence from the United States Using a Bunching Estimator 1
(2019), https://www.nber.org/papers/w25434.pdf.
\73\Zipperer Testimony at 5.
\74\Sylvia Allegretto & David Cooper, Twenty-Three Years and Still
Waiting for Change: Why It's Time to Give Tipped Workers the Regular
Minimum Wage 4 (2014), https://www.epi.org/files/2014/EPI-CWED-
BP379.pdf.
\75\Reich testimony at 11.
---------------------------------------------------------------------------
In July 2019, the Congressional Budget Office (CBO)
released a report analyzing the employment and family income of
a minimum wage proposal similar the H.R. 582.\76\ CBO also
analyzed the impacts of federal minimum wage increases to $12
by 2025 and $10 by 2025. CBO estimated that gradually raising
the minimum wage to $15 would increase earnings for up to 27.3
million workers in 2025, boost annual family income by hundreds
of dollars per year on average for families with income below
three times the federal poverty line, reduce income inequality,
and lift 1.3 million Americans--including 600,000 children--out
of poverty. Simultaneously, CBO predicted the policy would
decrease number of workers employed in any given week by 1.3
million in 2025. However, CBO's approach should not be applied
to H.R. 582. To arrive at its employment estimate, CBO states
that it synthesized results from multiple research studies,
some of which used high-quality, credible methods, but many of
which were methodologically flawed.\77\ CBO also overlooked the
fact that the vast majority of rigorous research from labor
economists, particularly more recent studies that take
advantage of significant state-level variation in minimum
wages, finds minimal or no negative effects on employment when
raising the minimum wage and multiple recent studies even find
positive effects.\78\
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\76\Like H.R. 582, CBO's $15 scenario would raise wages with five
annual increases, and thereafter index the minimum wage to median wage
growth. Similarly, CBO's scenario would also phase out exemptions for
tipped workers, workers with disabilities, and teens. However, CBO
assumes the first wage increase will take effect in 2020 rather than
2019. Cong. Budget Office, The Effects on Employment and Family Income
of Increasing the Federal Minimum Wage (July 8, 2019), https://
www.cbo.gov/publication/55410.
\77\Heidi Shierholz, CBO report shows broad benefits from higher
minimum wage (July 9, 2019), https://www.epi.org/press/cbo-report-
shows-broad-benefits-from-higher-minimum-wage/.
\78\Dale Belman & Paul Wolfson, What Does the Minimum Wage Do? 15
(2014), https://research.upjohn.org/cgi/
viewcontent.cgi?filename=0&article=1245&context=up_press&type=additional
; Shierholz, CBO report shows broad benefits from higher minimum wage
(2019).
---------------------------------------------------------------------------
While a 2017 University of Washington analysis of the first
stage of Seattle's minimum wage increase to $15 concluded that
the increase resulted in large employment losses,\79\ the study
drew wide criticism for its methodology, including but not
limited to: its reliance on a single case study; its inability
to properly statistically control for Seattle's booming economy
during the time of the study; and failure to account for
businesses with multiple locations, which excluded an estimated
40 percent of the impacted workforce.\80\ Notably, the study's
results imply that Seattle's minimum wage increase was the
cause of a large increase in the number of jobs paying more
than $19 per hour an implausible result, given that the minimum
wage had increased to only $13 during the authors' period of
study.\81\ In 2018, the study's authors issued a revised
version that walked back the study's strong conclusions,
although many labor economists have remaining methodological
criticisms.\82\
---------------------------------------------------------------------------
\79\Ekaterina Jardim et. al, Minimum Wage Increases, Wages, and
Low-Wage Employment: Evidence from Seattle, 38 (2018), https://
www.nber.org/papers/w23532.pdf.
\80\Gradually Raising the Minimum Wage to $15: Good for Workers,
Good for Businesses, and Good for the Economy Before H. Comm. on Educ.
and Labor, 116th Cong. (2019) (written testimony of Michael Reich,
Professor, University of California) [Hereinafter Reich Testimony]. See
also Josh Hoxie, The Seattle Minimum Wage Study is Utter B.S., Fortune
(Jun. 27, 2017), http://fortune.com/2017/06/27/seattle-minimum-wage-
study-results-impact-15-dollar-uw/; Ben Zipperer & John Schmitt, The
`High Road' Seattle Labor Market and the Effects of the Minimum Wage
Increase 8 (2017), https://www.epi.org/files/pdf/130743.pdf.
\81\Ben Zipperer & John Schmitt, The `High Road' Seattle Labor
Market and the Effects of the Minimum Wage Increase 4 (2017), https://
www.epi.org/files/pdf/130743.pdf.
\82\Noam Scheiber, They Said Seattle's Higher Base Pay Would Hurt
Workers. Why Did They Flip?, New York Times (Oct. 22, 2018), https://
www.nytimes.com/2018/10/22/business/economy/seattle-minimum-wage-
study.html.
---------------------------------------------------------------------------
Moreover, estimates that singularly focus on job loss or
other negative employment effects ignore the evidence that
working people overwhelmingly benefit when there is an increase
in the minimum wage. Dr. Zipperer's testimony at the February
7th hearing noted that: ``The benefits of a $15 minimum wage in
2024 for workers, their families, and their communities will
far outweigh any potential costs of the policy.''\83\ Indeed,
CBO's 2014 analysis found that raising the minimum wage lifted
nearly 1 million workers out of poverty and even the revised
2018 Seattle case study found that minimum wage workers on
average netted a pre-tax increase of $10 an hour per week.
---------------------------------------------------------------------------
\83\Zipperer Testimony at 5.
---------------------------------------------------------------------------
Furthermore, focusing on a static estimate such as job
losses ignores the high degree of worker ``churn'' in the low-
wage labor market, giving the misleading impression that the
result of higher minimum wages is that a given pool of workers
would lose their jobs, find no replacement, and have no
earnings over an entire year.\84\ By contrast, research on the
nature of low-wage work shows that higher minimum wages may
reduce hours worked and marginally increase time between jobs,
but generally do not lead to loss of entire jobs. Moreover, the
impact of lost hours and increased time between jobs are spread
across a large number of affected workers, each of whom work a
little less but earn more during the year overall.\85\ In other
words, a study finding any ``total reduction in employment''
(job loss) is in reality likely uncovering that workers may
work several fewer hours during a week, but they still take
home more pay due to an increase in the minimum wage.
---------------------------------------------------------------------------
\84\David Cooper et al., Bold Increases in the Minimum Wage Should
be Evaluated for the Benefits of Raising Low-wage Workers' Total
Earnings 2 (2018), https://www.epi.org/files/pdf/143838.pdf.
\85\Id.
---------------------------------------------------------------------------
MINIMUM WAGE INCREASES ARE LINKED WITH IMPROVED SOCIAL OUTCOMES
Raising the minimum wage is also associated with positive
social outcomes, including better health outcomes for working
adults, infants, and children. As Massachusetts State
Representative Paul Brodeur testified at the February 7th
hearing:
The secondary, and in some cases tertiary benefits of
raising the minimum wage are clear. Issues such as food
insecurity, improved childhood health statistics,
reduced employment turnover, and other factors have
emerged as having been largely effected by these
[minimum wage] increases. For example, a 2016 report by
the Century Foundation estimated that the increase to a
$15 minimum wage would decrease food insecurity in the
Commonwealth [of Massachusetts] by 7% as 18,000
households would no longer be food insecure. We expect
these trends to continue.\86\
---------------------------------------------------------------------------
\86\Gradually Raising the Minimum Wage to $15: Good for Workers,
Good for Businesses, and Good for the Economy Before H. Comm. on Educ.
and Labor, 116th Cong. (2019) (written testimony of Paul A. Brodeur,
State Representative 32nd Middlesex District Commonwealth of
Massachusetts House of Representatives, at 3) [Hereinafter Brodeur
Testimony].
In adults, studies strongly correlate increases in minimum
wages with increases in overall health and fewer illness-
induced absences from work.\87\ Researchers found that
increases in state minimum wages have been linked to decreased
smoking,\88\ particularly among women in low wage work.\89\
Additionally, with higher wages, workers have access to health
options that increase quality of life and longevity, including
the ability to afford healthier food.\90\ Researchers have also
linked a $15 minimum wage to a 4 to 8 percent reduction in
premature deaths among low-income populations in New York
City.\91\
---------------------------------------------------------------------------
\87\J. Paul Leigh & Juan Du, Effects of Minimum Wages on Population
Health 5 (2018), https://www.healthaffairs.org/do/10.1377/
hpb20180622.107025/full/HPB_2018_RWJF_06_W.pdf.
\88\Id.
\89\Id.
\90\Steven H. Woolf et al., How Are Income and Wealth Linked to
Health and Longevity? 5 (2015), https://www.urban.org/sites/default/
files/publication/49116/2000178-How-are-Income-and-Wealth-Linked-to-
Health-and-Longevity.pdf.
\91\Tsu-Yu Tsao et al., Estimating Potential Reductions in
Premature Mortality in New York City From Raising the Minimum Wage to
$15, 106 Am. Journal of Pub. Health 1036 (2016).
---------------------------------------------------------------------------
Raising the minimum wage will have a positive impact on
children and families. Nearly one in five working mothers with
children under the age of three work in low-wage jobs.\92\
Raising the minimum wage boosts families' disposable incomes
and directly affects a caregiver's ability to provide a child
with basic needs such as appropriate clothing, more food and
nutrients, medical care, and better home conditions. This is
particularly important for children growing up in single,
female-headed households who are more likely to lack basic
needs\93\ and indirectly experience toxic stress due to deep
poverty.\94\ As Mr. Wise testified at the February 7th hearing:
\92\Julie Vogtman, Nearly one in Five Working Mothers of Very Young
Children Work in Low-Wage Jobs, Nat'l Women's Law Ctr. (Apr. 5, 2017),
https://nwlc.org/blog/nearly-one-in-five-working-mothers-of-very-young-
children-work-in-low-wage-jobs/.
\93\Kerri M. Raissian & Lindsey Rose Bullinger, Money Matters: Does
the Minimum Wage Affect Child Maltreatment Rates, 72 Child and Youth
Serv. Rev. 60, 65 (2017).
\94\Nat'l Sci. Council on the Developing Child, The Timing and
Quality of Early Experiences Combine to Shape Brain Architecture 8
(2007), https://46y5eh11fhgw3ve3ytpwxt9r-wpengine.netdna-ssl.com/wp-
content/uploads/2007/05/Timing__Quality__Early__Experiences-1.pdf.
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I often imagine what $15 an hour would mean for me
and my family. I wouldn't have to worry about providing
the basic necessities for my family. We could keep food
on the table. No one would have to worry about doing
homework in the dark. I could get them the school
supplies whenever they need them.\95\
---------------------------------------------------------------------------
\95\Wise Testimony at 3.
Moreover, minimum wage increases are proven to reduce the
risk of child maltreatment, particularly neglect. These effects
are pronounced for young children under 5 years of age and
school-aged children. Recently published research provides
strong evidence that increasing the minimum wage by $1.00 would
lead to an annual reduction of 9,700 child neglect reports to
Child Protection Services.\96\
---------------------------------------------------------------------------
\96\Christopher Maynard, How Raising the Minimum Wage by $1 Could
Reduce Cases of Child Neglect, Consumer Affairs (August 18, 2017),
https://www.consumeraffairs.com/news/how-raising-the-minimum-wage-by-1-
could-reduce-cases-of-child-neglect-081817.html.
---------------------------------------------------------------------------
Increases in the federal minimum wage are also linked to
improved health and economic outcomes for low-wage mothers and
their babies. Researchers have found that infant mortality, low
birth weight, and risk of poor health are greater for those
babies born into families where the primary breadwinner earns
the federal minimum wage or less.\97\ Researchers have found
that a 10 percent increase in the minimum wage reduces infant
mortality rates by 3.2 percent\98\ and that a $1.00 increase in
the minimum wage increases birth weight significantly.\99\ A
2016 study found that ``[i]f all states in 2014 had increased
their minimum wages by one dollar there would have likely been
an estimated 2,790 fewer low birth weight births and 518 fewer
post neonatal deaths for the year.''\100\ Increases in income
during pregnancy are also correlated with a number of positive
effects for both maternal and babies' health including improved
nutrition, lower financial stress, and greater prenatal
care.\101\
---------------------------------------------------------------------------
\97\Kelli Komro, The Effect of an Increased Minimum Wage on Infant
Mortality and Birth Weight, 106 Am. Journal of Pub. Health 1514, 1516
(2016).
\98\Ali Jalali, The Minimum Wage and Infant Mortality 14 (2018),
https://static1.squarespace.com/static/5b79a2af9f8770250f45ab0c/t/
5bd7bb3e24a694466008aae9/1540864832308/JMP.pdf.
\99\George Wehby et al., Effects of the Minimum Wage on Infant
Health 4 (2018), https://www.nber.org/papers/w22373.pdf.
\100\Kelli Komro, The Effect of an Increased Minimum Wage on Infant
Mortality and Birth Weight, 106 Am. Journal of Pub. Health 1514, 1516
(2016).
\101\George Wehby et al., Effects of the Minimum Wage on Infant
Health 3 (2016), https://www.nber.org/papers/w22373.pdf.
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Research also demonstrates that increases in the minimum
wage reduce recidivism by drawing individuals into the legal
labor market rather than income-generating criminal activity
(e.g., property crimes or selling illegal drugs). A 2018 study
found that a minimum wage increase of $0.50 translates into a
2.8 percent decrease in the probability of men and women
returning to prison within one year.\102\ This decrease in
recidivism can translate into savings in corrections costs for
state and federal governments.
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\102\Amanda Y. Agan & Michael D. Makowsky, The Minimum Wage, EITC,
and Criminal Recidivism 15 (2018), https://www.nber.org/papers/
w25116.pdf.
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RAISING THE FEDERAL MINIMUM WAGE BENEFITS LOCAL BUSINESSES
Congress has long recognized the impact of the minimum wage
on commerce, declaring in the FLSA's preamble that ``[l]abor
conditions detrimental to the maintenance of the minimum
standard of living necessary for health, efficiency, and
general wellbeing of workers'' are harmful to the economy by
burdening ``the free flow of goods.''\103\ Yet, efforts to
raise the federal minimum wage are often met with concerns
regarding impacts to businesses, including small and local
businesses. As discussed below, research indicates businesses
can absorb gradual minimum wage increases, without loss of
profits or negative employment effects, through small price
adjustments, partially offset by increased sales and decreased
employee turnover costs.
---------------------------------------------------------------------------
\103\29 U.S.C. Sec. 202(a).
---------------------------------------------------------------------------
Businesses adjust to minimum wage increases through slight price
increases without loss of profits
Research shows that businesses absorb minimum wage
increases primarily through relatively small price increases
passed on to consumers as well as through reduced turnover and
enhanced productivity among their workers. A 2018 U.C. Berkeley
study of 884 restaurants in San Jose, California, following a
25 percent minimum wage increase from $8 to $10 an hour did not
find reduced employment. Instead, it found that restaurants
absorbed higher labor costs by slightly increasing menu
prices--1.45 percent on average--and through cost savings from
lower employee turnover.\104\ Similarly, a 2017 Federal Reserve
Bank of Boston analysis of 27 metropolitan statistical areas
found that a 10 percent increase in the minimum wage increased
prices on the whole by only 0.3 percent.\105\ Further, recent
analysis on the impact of a $15 minimum wage by 2024 estimates
that ``businesses could absorb the remaining payroll cost
increases by increasing prices by 0.6 percent through 2024.
This price increase is well below the annual inflation rate of
1.7 percent over the past five years.''\106\
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\104\Sylvia Allegretto & Michael Reich, Are Local Minimum Wages
Absorbed by Price Increases?Estimates from Internet-based Restaurant
Menus 25 (2016),http://www.irle.berkeley.edu/files/2015/Are-Local-
Minimum-Wages-Absorbed-by-Price-Increases.pdf.
\105\Daniel Cooper et al., The Local Aggregate Effects of Minimum
Wage Increases 12 (2017), https://www.minneapolisfed.org/institute/
working-papers/wp17-25.pdf.
\106\Michael Reich et al., The Employment Effects of a $15 Minimum
Wage in the U.S. and in Mississippi: A Simulation Approach 5 (2019),
http://irle.berkeley.edu/files/2019/02/The-Employment-Effects-of-a-15-
Minimum-Wage-in-the-US-and-in-Mississippi.pdf.
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Businesses and local economies benefit from increased spending by low-
wage workers
Minimum wage increases stimulate consumer spending and
consumption, which helps offset price increases. A 2013 report
estimated that a $1.75 increase in the hourly federal minimum
wage could increase aggregate household spending by $48
billion, or 0.3 percent of the Gross Domestic Product, in the
year following the minimum wage hike.\107\ Similarly, a 2016
report projected that a 10 percent increase in the minimum wage
would increase national sales by $2 billion, or 1.1 percent,
per year.\108\ A 2017 Federal Reserve Bank of Boston paper
found that increases in minimum wages lead to nominal increases
in food consumption both at and away from home.\109\
Specifically, the authors noted that a 10 percent minimum wage
increase led to an increase in real spending on food away from
home by about 0.5 percentage points.\110\ This same paper also
found increased purchases in durable good purchases, such as
cars, in advance of a change in the minimum wage.\111\
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\107\Daniel Aaronson & Eric French, How Does a Federal Minimum Wage
Hike Affect Aggregate Household Spending 3 (2013), https://www.
chicagofed. org/publications/chicago-fed-letter/2013/august-313.
\108\Cristian Alonso, Beyond Labor Market Outcomes: The Impact of
the Minimum Wage on Nondurable Consumption 1-2 (2016), http://dx. doi.
org/10. 2139/ssrn. 2818623.
\109\Daniel Cooper et al., The Local Aggregate Effects of Minimum
Wage Increases 3 (2017), https://www.minneapolisfed.org/institute/
working-papers/wp17-25.pdf.
\110\Id.
\111\Id.
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Ms. Eckhouse, an Iowan small business owner, testified at
the February 7th hearing on how increased spending and
consumption from a minimum wage increase is important for
sales:
Workers in one business are the consumers for
another. Minimum wage increases put money in the hands
of people who most need to spend it--for car repairs
and new shoes for a child, or by not having to choose
between groceries and a medical bill. Increased minimum
wages mean increased consumer spending across all
businesses, helping other businesses grow.\112\
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\112\Gradually Raising the Minimum Wage to $15: Good for Workers,
Good for Businesses, and Good for the Economy Before H. Comm. on Educ.
and Labor, 116th Cong. (2019) (written testimony of Kathy Eckhouse
Owner of La Quercia at 3) [Hereinafter Eckhouse Testimony].
This powerful impact to economic growth from a small wage
increase is due to the well-documented tendency of low-wage
workers to spend their additional earnings. In 2012, economists
found that immediately following a minimum wage hike, household
income rose on average by about $250 per quarter; however, for
households with minimum wage workers spending increased by
roughly $700 per quarter.\113\ Mr. Wise testified at the
February 7th hearing about how an increase to the minimum wage
would mean he would more money in his community:
---------------------------------------------------------------------------
\113\Daniel Aaronson et al., The Spending and Debt Response to
Minimum Wage Hikes, 7 Am. Econ. Review 3111, 3125 (2012).
With a $15 living wage, I could afford to take them
out to do something fun. Honestly, the last time I went
on a date with my fiance was to see the movie `Matrix'.
That was in 1999. Valentine's Day is next week and I
want to buy each of the women in my life some flowers .
. . [B]ut what would $15 really mean? It would mean my
daughters could meet their grandmother for the very
first time, because we could afford to travel to South
Carolina to visit her.\114\
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\114\Wise Testimony at 3.
Ms. Eckhouse made this point at the February 7th hearing:
``[i]t's not raising the minimum wage that is a threat to
business. It's stagnant wages, such as we've seen in recent
decades, which weaken the consumer demand that businesses
depend on to survive and grow.''\115\
---------------------------------------------------------------------------
\115\Eckhouse Testimony at 3.
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Businesses benefit from cost savings from decreased employee turnover
As a result of the increase in the minimum wage, businesses
also realize cost savings from lower employee turnover, which
also offset price increases.\116\ A 2012 case study found that
turnover of an individual employee costs businesses about one-
fifth of the employee's salary.\117\ A 2014 report found
turnover rates for teenaged and restaurant workers fell
substantially following a minimum wage increase, with most of
the reductions coming within the first three quarters after the
increase and without significant changes in employment
levels.\118\ Specifically, the economists found that ``[f]or a
10 percent minimum wage increase, turnover rates decline by
around 2.0 percent for teenagers and 2.1 percent for the
restaurant workforce.''\119\
---------------------------------------------------------------------------
\116\Arindrajit Dube et al., Minimum Wage Shocks, Employment Flows
and Labor Market Frictions, 34 Journal of Labor Econs. 663-704, 664
(2016).
\117\Heather Boushey & Sarah Jane Glynn, There Are Significant
Business Costs to Replacing Employees, Ctr. for Am. Progress (November
16, 2012, 3:44 AM), https://www.americanprogress.org/issues/economy/
reports/2012/11/16/44464/there-are-significant-business-costs-to-
replacing-employees/.
\118\Supra note 116 at 700.
\119\Id.
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Ms. Eckhouse's testimony at the February 7th hearing
explained how businesses benefit from decreased employee
turnover as a result of minimum wage increases:
Employees new to our operation--or any operation--
aren't as productive as long-term staff. They require
skills and training specific to us. It takes at least
three months for an employee to understand our
particular processes and be efficient, even those who
have worked in meat processing plants before. That's
just the beginning. It takes a year for true
proficiency; all jobs in all occupations require
familiarity and skill. We see more waste, more down
time, and more inefficiency on our production line with
newer staff. That's costly to us. And because turnover
is costly for all employers, reduced turnover is an
important benefit of raising the minimum wage.
In addition, not spending time on a constant cycle of
rehiring and training frees us to look beyond the day-
to-day to innovate and grow our business. It encourages
employees to be a part of that process, too, as they
develop new skills and techniques in our field, and
familiarity with what customers want.\120\
---------------------------------------------------------------------------
\120\Eckhouse Testimony at 2.
A statement signed by over 800 businesses in support of
raising the federal minimum wage to $15 by 2024 states,
``[r]aising the minimum wage pays off in lower employee
turnover, reduced hiring and training costs, lower error rates,
increased productivity and better customer service. Employees
often make the difference between repeat customers or lost
customers.''\121\
---------------------------------------------------------------------------
\121\Businesses for a Fair Minimum Wage, Federal Sign On Statement,
https://www.businessforafairminimumwage.org/Federal-15-By-2024-Sign-On-
Statement (last visited Jun. 18, 2019).
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Minimum wage increases lead to government savings on public benefits
Ensuring that workers have enough money to cover their
basic needs can result in a reduction in public expenditures.
For example, a 2014 report looking at the impacts of raising
the minimum wage to $10.10 an hour on the Supplemental
Nutrition Assistance Program (SNAP) found programmatic cost
savings.\122\ The report estimated that raising the federal
minimum wage to $10.10 per hour would lead to an annual
decrease in program expenditures by nearly $4.6 billion (or
about 6 percent of the SNAP program), leading to program
savings of $46 billion over 10 years,\123\ and an increase to
$12 per hour would save $53 billion over 10 years.\124\
---------------------------------------------------------------------------
\122\Rachel West & Michael Reich, The Effects of Minimum Wages on
SNAP Enrollments and Expenditures 5 (2014), https://
cdn.americanprogress.org/wp-content/uploads/2014/03/MinimumWage-
report.pdf.
\123\Id.
\124\Rachel West, The Murray-Scott Minimum-Wage Bill: A Win-Win for
Working Families and Taxpayers, Ctr. for Am. Progress (Apr. 30, 2015,
9:01 AM), https://www.americanprogress.org/issues/poverty/news/2015/04/
30/111808/the-murray-scott-minimum-wage-bill-a-win-win-for-working-
families-and-taxpayers/.
---------------------------------------------------------------------------
Mr. Brodeur testified at the February 7th hearing regarding
the impacts of raising wages on benefit programs in
Massachusetts:
[We] saw that the increased purchasing power,
increased taxable income, reduced caseloads in social
benefits programs, and growth in business confidence
and success were outcomes of our incremental increases
in the minimum wage.\125\
---------------------------------------------------------------------------
\125\Brodeur Testimony at 3.
Ms. Eckhouse testified at the February 7th hearing
---------------------------------------------------------------------------
regarding the costs to public benefit programs:
When businesses pay wages that are not enough to live
on, the costs of necessities like food and housing get
partly shifted to the community at large, to taxpayer-
funded government assistance programs and food banks,
for example. It also means that our business is
subsidizing the profits of low-pay competitors. This is
not a fair or efficient way to run an economy.\126\
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\126\Eckhouse Testimony at 2.
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SUBMINIMUM WAGES UNDER THE FLSA CREATE INEQUITY FOR TIPPED WORKERS,
INDIVIDUALS WITH DISABILITIES, AND TEENAGERS
The tipped minimum wage leaves workers vulnerable
Tipped workers are generally low-wage workers, earning
about $6.50 per hour less (in 2016 dollars) than the median,
hourly non-tipped worker and experiencing poverty at more than
twice the rate of non-tipped workers.\127\ Tipped workers'
earnings are often irregular and unpredictable, making it
difficult to budget and plan. Compounding these challenges,
research shows that tipping is often discriminatory, with both
White and Black consumers discriminating against Black workers
and leaving smaller tips than those left for White tipped
workers.\128\
---------------------------------------------------------------------------
\127\David Cooper, Valentine's Day is Better on the West Coast (at
Least For Restaurant Servers), Working Econs. Blog (February 7, 2017,
1:46 PM), https://www.epi.org/blog/valentines-day-is-better-on-the-
west-coast-at-least-for-restaurant-servers/.
\128\Michael Lynn et al., Consumer Racial Discrimination in
Tipping: A Replication and Extension 13 (2008), https://
www.wagehourlitigation.com/wp-content/uploads/sites/215/2015/10/
cornell.pdf.
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Ms. Gupta testified at the February 7th hearing about how
the origins of tipping are intertwined with the country's
ongoing struggles with racial and gender inequality. Ms. Gupta
noted that:
[B]efore the Civil War, tipping was largely frowned
upon in the United States. But after its end, the
practice of tipping proliferated. At that time, the
restaurant and hospitality industry, exemplified by the
Pullman Company, hired newly freed slaves without
paying them base wages. The effect was to create a
permanent servant class, for whom the responsibility of
paying a wage was shifted from employers to
customers.\129\
---------------------------------------------------------------------------
\129\Gradually Raising the Minimum Wage to $15: Good for Workers,
Good for Businesses, and Good for the Economy Before H. Comm. on Educ.
and Labor, 116th Cong. (2019) (written testimony of Vanita Gupta
President and CEO of the Leadership Conference on Civil and Human
Rights at 4) [Hereinafter Gupta Testimony].
As first passed in 1938, the FLSA did not reference tips or
tipped workers. ``Retail and service establishments,'' which
have a high number of tipped workers, were not covered under
the statute.\130\ In 1942, the U.S. Supreme Court affirmed the
tipping model exemplified by Pullman workers, holding in
Williams v. Jacksonville Terminal Co. that an employer may
count an employee's tips as a credit against the employer's
full obligation to pay the minimum wage.\131\ This policy
continued to have a disproportionate impact on workers of
color. By 1900, about 25 percent of all Black non-agricultural
workers had jobs as servants or waiters, including the
overwhelming majority of Black women.\132\ ``Having to depend
on tipping kept African Americans in an economically and
socially subordinate position.''\133\
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\130\Fair Labor Standards Act of 1938, Pub. L. No. 75-718, 52 Stat.
1060.
\131\315 U.S. 386 (1942).
\132\R. R. Wright, Jr., The Negro in Unskilled Labor, 49 The Annals
of the Am. Acad. of Political and Soc. Scis. 19, 19-27 (1913).
\133\Gupta Testimony at 4.
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In 1966, Congress amended the FLSA to expand its coverage
to hotels and restaurants, and it included ``tip credit''
provisions for the first time.\134\ Under section 3(m) of the
FLSA, an employer may pay a ``tipped employee''\135\ a cash
wage that is less than the full federal minimum wage, as long
as the combination of tips and the cash wage from the employer
equals the federal minimum wage. A ``tip credit'' is the amount
from employee tips that an employer may count against its
liability for the required payment of the full federal minimum
wage.\136\ The first tip credit was established as part of the
1966 FLSA amendments, which set the cash wage, also known as
the tipped minimum wage, to 50 percent of the minimum wage.
Over the next three decades, this percent ranged from 50 to 60
percent of the minimum wage.\137\ In 1996, however, Congress
decoupled the tipped minimum wage from the minimum wage,
locking the cash wage at $2.13 per hour.\138\ There has not
been an increase in the tipped minimum wage in 28 years.\139\
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\134\Fair Labor Standards Amendments of 1966, Pub. Law No. 89-601,
80 Stat. 830 (current version at 29 U.S.C. Sec. 201, et seq.).
\135\To be considered a tipped employee, an employee must be
``engaged in an occupation in which he customarily and regularly
receives more than $30 a month in tips.'' 29 U.S.C. Sec. 203(t).
\136\Prior to 1996, the employer cash wage and tip credit were set
as a percentage of the minimum wage. The percentage ranged from 40 to
55 percent of the minimum wage.
\137\In 1979, the tipped minimum wage was set to 55 percent of the
minimum wage (Fair Labor Standards Amendments of 1977, Pub. L. No. 95-
151). In 1980, the tipped minimum wage was set to 60 percent of the
minimum wage (the Fair Labor Standards Amendments of 1977, Pub. L. No.
95-151). In 1990, the tipped minimum wage was set to 55 percent of the
minimum wage (Fair Labor Standards Amendments of 1989, Pub. L. No. 101-
157). In 1991, the tipped minimum wage was set to 50 percent of the
minimum wage (Fair Labor Standards Amendments of 1989, Pub. L. No. 101-
157).
\138\Small Business Job Protection Act of 1996, Pub. L. No. 104-
188, 110 Stat. 1755.
\139\From inception to 1996, the tipped wage was set as a
percentage of the full minimum wage. In 1996, the tipped wage was
decoupled from the minimum wage and set as a fixed amount.
---------------------------------------------------------------------------
Of the approximately five million tipped workers, an
estimated four million tipped employees work in areas where
employers are permitted to take a tip credit.\140\ An estimated
one million tipped employees work in the seven states (Alaska,
California, Minnesota, Montana, Nevada, Oregon, and Washington)
often referred to as ``equal treatment states'' that prohibit
employers from using a tip credit and require tipped employees
be paid the full statutory state or federal minimum wage,
whichever is greater. Seventeen states require a cash wage that
is equal to the federal rate of $2.13 per hour.\141\ Twenty-six
states and the District of Columbia set a tipped minimum wage
that is greater than the federal rate of $2.13 per hour.\142\
---------------------------------------------------------------------------
\140\There is no definitive count of the number of tipped
employees. The Current Population Survey (CPS), which is typically used
to study minimum wage and related labor issues, does not contain an
identifier for tipped workers. Rather, the CPS includes a variable
identifying individuals as receiving ``overtime pay, tips, or
commissions.'' While this is not specific enough to determine the
tipped status of any given respondent in the CPS, most researchers in
this area have tended to use the CPS as a starting point by identifying
individuals in the CPS reporting high shares of tips, overtime, or
commissions. Based on calculations from the Congressional Research
Service, an estimated 5.1 million workers are in occupations typically
considered ``predominantly tipped'' occupations. An estimated 1.05
million tipped employees work in the seven states that have prohibited
use of a tip credit. Estimates are based on BLS Occupational Employment
Statistics (OES) data for 2017.
\141\Twelve states require a cash wage of $2.13 an hour by state
law or by reference to federal law: Georgia, Indiana, Kansas, Kentucky,
Nebraska, New Jersey, New Mexico, North Carolina, Texas, Utah,
Virginia, and Wyoming. Five states have no state minimum wage: Alabama,
Louisiana, Mississippi, South Carolina, and Tennessee. Wage and Hour
Division, Minimum Wages for Tipped Employees (January 1, 2019), https:/
/www.dol.gov/whd/state/tipped.htm.
\142\Id.
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Research demonstrates that tipped workers fare better in
the seven states that prohibit employers from taking a tip
credit. Tipped workers in these states that have eliminated the
tipped subminimum wage earn about 15 percent more per hour than
workers receiving $2.13 as a cash wage.\143\ Data also show
that customers in equal treatment states continue to tip. In
fact, a higher percentage of customers tip in Washington State
(an equal treatment state) than in New York State (a state that
allows employers to take a tip credit), and customers in Alaska
(an equal treatment state) leave the highest average tip among
all 50 states.\144\ Poverty rates for tipped workers,
especially waitstaff and bartenders, in equal treatment states
are lower than states with a $2.13 tipped minimum wage.\145\
Tipped occupations in equal treatment states also have a 23
percent smaller gender wage gap compared to states with a $2.13
tipped minimum cash wage.\146\
---------------------------------------------------------------------------
\143\Elise Gould & David Cooper, Seven Facts about Tipped Workers
and the Tipped Minimum Wage, Working Econs. Blog (May 31, 2018, 4:40
PM), https://www.epi.org/blog/seven-facts-about-tipped-workers-and-the-
tipped-minimum-wage/.
\144\Roberto A. Ferdman, Which US States Tip the Most (and Least),
as Shown by Millions of Square Transactions, Quartz (March 21, 2014),
https://qz.com/189458/the-united-states-of-tipping/.
\145\Elise Gould & David Cooper, supra note 143.
\146\Nat'l Women's Law Ctr., The Raise the Wage Act: Boosting
Women's Paychecks and Advancing Equal Pay 2 (2017), https://nwlc-
ciw49tixgw5lbab.stackpathdns.com/wp-content/uploads/2019/02/Raise-the-
Wage-Act-Boosting-Womens-Pay-Checks.pdf.
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Research also shows that increases in the tipped minimum
wage do not have negative effects on employment in full-service
restaurants or on the number of full-service restaurants.\147\
In fact, analysis of employment and establishment data from
equal treatment states shows that between 2011 and 2014, the
number of full-service restaurants grew by 6.0 percent in equal
treatment states compared to 4.1 percent growth in states with
separate, lower tipped minimum wages.\148\ In the same period,
employment in full-service restaurants grew 13.2 percent in
equal treatment states compared to 9.1 percent in non-equal
treatment states.\149\ Additionally, from January 1995 to May
2014, employment in the leisure and hospitality sector, which
employs a high percentage of tipped workers, grew 43.2 percent
in the seven equal treatment states, compared with 39.2 percent
growth in non-equal treatment states.\150\
---------------------------------------------------------------------------
\147\Michael Lynn & Christopher Boone, Have Minimum Wage Increases
Hurt the Restaurant Industry? The Evidence Says No! 3-13 (2015),
https://scholarship.sha.cornell.edu/cgi/
viewcontent.cgi?article=1000&context=chrreports.
\148\Elise Gould & David Cooper, supra note 143.
\149\Id.
\150\Sylvia Allegretto & David Cooper, Twenty-three Years and Still
Waiting for Change 18 (2014), https://www.epi.org/files/2014/EPI-CWED-
BP379.pdf.
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Proponents of keeping the tip credit argue that because
employers are obligated to ensure tipped employees are always
making the full federal minimum wage, there is no need to
change the system. However, the complexity of the two-tier wage
system can be confusing and burdensome for employers, making
compliance and enforcement difficult. Too often, employers,
through error or outright wage theft, fail to make up the
difference and ensure their workers are making the full minimum
wage. According to a 2014 report, more than 1 in 10 of surveyed
workers in predominantly tipped occupations report they
received hourly wages, including tips, below the full federal
minimum wage.\151\ A compliance sweep of nearly 9,000 full-
service restaurants by the U.S. Department of Labor's (DOL)
Wage and Hour Division (WHD) from 2010 to 2012 found 83.8
percent of investigated restaurants had some type of violation;
WHD found 1,170 tip credit violations that resulted in nearly
$5.5 million in back wages.\152\
---------------------------------------------------------------------------
\151\The Nat'l Econ. Council et al., The Impact of Raising the
Minimum Wage on Women, and the Importance of Ensuring a Robust Tipped
Minimum Wage 2 (2014), https://obamawhitehouse.archives.gov/sites/
default/files/docs/20140325minimumwageandwomenreportfinal.pdf.
\152\Sylvia A. Allegretto, Should New York State Eliminate its
Subminimum Wage? 11 (2018), http://irle.berkeley.edu/files/2018/04/
Should-New-York-State-Eliminate-its-Subminimum-Wage.pdf.
---------------------------------------------------------------------------
In November 2018, the Trump Administration rescinded
guidance that prohibited employers from using a tip credit for
employees who spend more than 20 percent of their time
performing duties incidental to the tipped employee's regular
duties and that are not by themselves directed toward producing
tips. This rescinded guidance was designed to ensure that
employers could not evade minimum wage requirements by having
tipped workers perform work that a non-tipped worker would
normally perform. The rollback of this guidance will allow
employers to more often make use of a tip credit, making
workers more vulnerable to wage theft.
The subminimum wage for individuals with disabilities is a vestige of
the discriminatory past
Section 14(c) of the FLSA allows employers and
organizations to apply to DOL for special certificates to pay
individuals with disabilities at wages less than the minimum
wage and less than the prevailing wage. There is no minimum
wage requirement for employers hiring an individual with a
disability under 14(c) certificates. More than half of these
employees earn $2.50 an hour or less.\153\ Eliminating
subminimum wage certificates for individuals with disabilities
will create opportunities for individuals with disabilities to
be competitively employed, taxpaying citizens and participate
more fully in their communities. Furthermore, the use of these
certificates is on the decline. A GAO review of 14(c)
certificate holders in 2001 found over 5,600 employers
nationwide utilized 14(c) certificates for 424,000
workers.\154\ In July 2018, there were less than 200,000
workers with disabilities paid subminimum wages.\155\
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\153\Gov't Accountability Office, Special Minimum Wage Program:
Centers Offer Employment and Support Services to Workers with
Disabilities, but Labor Should Improve Oversight 4 (2001), https://
www.gao.gov/new.items/d01886.pdf.
\154\Id.
\155\Dep't of Labor, 14(c) Certificate Holders, https://
www.dol.gov/whd/workerswithdisabilities/certificates.htm.
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In 1938, when Section 14(c) of the FLSA was enacted,
individuals with disabilities were predominantly housed in
institutions and viewed as unable to learn or function
independently. There were no statutory requirements to support
individuals with disabilities in the workplace, and individuals
with disabilities did not have legal protections from
discrimination. Today, individuals with disabilities are
trained to enter the workforce alongside their peers. Federal
policy now makes a presumption of ability, reflecting advances
in research and a better understanding of disability. This
presumption of ability, paired with improvements in technology
and support for access to such technology, empowers individuals
with disabilities to be as productive as their peers. Section
14(c) is the only remaining vestige of the outdated model and
the presumption of inability in federal policy.
Since 1990, the Americans with Disabilities Act of 1990
(ADA) has defined disability discrimination as the failure to
provide a reasonable accommodation to a person with a
disability who is otherwise qualified to perform the essential
functions of his or her job. Further, in 1999 the Supreme Court
held in Olmstead v. L.C. that ``unjustified isolation'' of
individuals with disabilities is discrimination and a violation
of Title II of the ADA (which prohibits discrimination on the
basis of disability in all services, programs, and activities
provided to the public by state and local governments).\156\
The decision became known as the ``integration mandate'' as the
Court held that public entities must provide community-based
services to individuals with disabilities when the services are
appropriate, if the individual wants the services, and if the
services can be reasonably accommodated. The decision
underscored the importance of the four goals of the ADA: that
individuals with disabilities have a right to independent
living, equal opportunities, economic self-sufficiency, and
full participation in society.
---------------------------------------------------------------------------
\156\Olmstead v. L.C. by Zimring, 527 U.S. 581, 582 (1999).
---------------------------------------------------------------------------
During an exchange at the February 7th hearing between Ms.
Gupta and Congressman Andy Levin (D-MI-9), they discussed the
intersection of the ADA and phasing out 14(c):
Mr. Levin: [. . .] The FLSA has a provision, section
14(c), as you know, that allows individuals with
disabilities to be paid a subminimum wage. As your
testimony states, some are paid as little as pennies an
hour. Why is it important to phase out 14(c) to ensure
all people in this country are paid a fair wage, as
these groups are requesting?
Ms. Gupta: Thank you, Congressman. Section 14(c) of
the FLSA was actually written at a time when
individuals with disabilities were predominantly housed
in institutions and endured long-term segregation. At
that time, there were no statutory requirements that
would support individuals with disabilities in the
workplace, and individuals with disabilities didn't
actually have legal protections from discrimination.
And when Congress passed the ADA in 1990, it ushered in
a new era, and then the Supreme Court issued their
Olmstead versus L.C. opinion. And the reality is that
people with disabilities deserve to work alongside
friends, peers, and neighbors without disabilities.
They deserve to earn fair wages, to access equal
opportunity for advancement. And the 14(c) of the FLSA
has really locked classes of people with disabilities,
particularly with intellectual and developmental
disabilities, into really degrading subminimum wage and
sheltered workshops.
Mr. Levin: And I assume it almost assures their
continued dependence on family or Federal dollars of
other kinds to be able to live and have food and
shelter and so forth.
Ms. Gupta: That is right. It has created an increased
long-term dependency and, of course, this also can
create deeply kind of humiliating and personal
experiences that make people with disabilities feel
like kind of subhuman.\157\
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\157\House Comm. on Educ. and Labor, Gradually Raising the Minimum
Wage to $15: Good for Workers, Good for Business, Good for the Economy,
YouTube (Feb. 7, 2019), https://www.youtube.com/watch?v=JDGkim7aaHI
(question and answer between Mr. Levin and Mr. Gupta at 6:15:10).
Despite congressional inaction, six states and the city of
Seattle, Washington, have taken steps to phase out 14(c)
certificates. Vermont was the first state to phase out 14(c)
certificates; beginning in 1996 and ending in 2002, the state
defunded entities holding 14(c) certificates. Oregon and Rhode
Island are in the process of phasing out 14(c) certificates
after settling a lawsuit with the Obama Administration's
Department of Justice on cases alleging violations under the
ADA. In 2018, Seattle became the first city to phase out the
use of 14(c) certificates. This is notable as Seattle was among
the first cities to pass a law raising its minimum wage to $15
an hour.
Opponents of phasing out of 14(c) certificates contend that
eliminating 14(c) certificates will leave individuals with
disabilities without employment. However, thoughtful and well-
planned supports for individuals and for employers holding
14(c) certificates can help transition workplaces and avoid job
loss for these individuals. States that have phased out 14(c)
have found that individuals with disabilities continue to work
and contribute to their local economies. Vermont reports that
62 percent of individuals with disabilities in the state find
work in the community within one year of receiving state
employment supports.\158\ Since 2005, Vermont has seen
individuals with disabilities pay $11.9 million in payroll
taxes, and the state has reduced Social Security and other
social services by over $5.5 million.\159\
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\158\Halle Stockston, Vermont Closed Workshops for People with
Disabilities; What Happened Next, Public Source (Sept. 24, 2014),
https://www.publicsource.org/vermont-closed-workshops-for-people-with-
disabilities-what-happened-next/#.VLQ0V9LF8fY.
\159\Chris Serres, Inclusion Pays Off, Star Tribune (Nov. 11,
2015), http://www.startribune.com/vermont-took-bold-step-to-end-
segregation-of-disabled-adults/330697181/#/.
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Another common criticism of phasing out of 14(c)
certificates is that individuals with disabilities cannot be as
productive as workers without disabilities and therefore cannot
be paid a regular wage. Individuals with disabilities have
their wages calculated under 14(c) certificates based on time
trials that have no oversight and are not compliant with the
ADA. Thus, the very nature of the calculation is
discriminatory. While some employer advocates of 14(c)
certificates suggest subminimum wage employment leads to
higher-paying jobs, GAO found that in 2000 only ``[a]bout 13
percent of all 14(c) workers in work centers left the center;
about 5 percent of the workers left to take a job in the
community earning either special minimum wages or at least the
minimum wage.''\160\ Ms. Gupta stated during her testimony at
the February 7th hearing:
\160\Gov't Accountability Office, Special Minimum Wage Program:
Centers Offer Employment and Support Services to Workers with
Disabilities, but Labor Should Improve Oversight 4 (2001), https://
www.gao.gov/new.items/d01886.pdf.
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[U]nfortunately, 20 years after Olmstead and almost
30 years after the passage of the ADA, too many people
with disabilities spend their time in segregated
workshops or day programs with some paid just pennies
per hour. While in theory segregated settings provide
job training and experience to people with disabilities
and help them find regular employment in their
community, the reality is that too many remain stuck in
segregated settings for years.\161\
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\161\House Comm. on Educ. and Labor, Gradually Raising the Minimum
Wage to $15: Good for Workers, Good for Business, Good for the Economy,
YouTube (Feb. 7, 2019), https://www.youtube.com/watch?v=JDGkim7aaHI
(statement by Ms. Gupta at 5:18:59).
Phasing out 14(c) will allow workers with disabilities to
earn the same wage as other workers and will prevent
discrimination on the basis of disability.
Eliminating 14(c) will have additional positive impacts on
individuals with disabilities. When transitioning to
competitive employment, research has shown that individuals
with disabilities spend more time engaged in and contributing
to their communities and developing meaningful natural
supports.\162\ Individuals with disabilities will also have
more money from their paychecks to spend in their communities
and contribute to the local economy.
---------------------------------------------------------------------------
\162\Nat'l Core Indicators, What work means: What does NCI tell us
about the quality of life of adults with intellectual and developmental
disabilities who are employed in the community? 5 NCI Data Brief 7
(2011), http://www.nationalcoreindicators.org/upload/core-indicators/
NCI_Data_Brief-_Employment-_Issue_5_Dec_2011_FINAL_1.pdf
---------------------------------------------------------------------------
During the February 7th hearing, Ms. Gupta and Congressman
Joseph Morelle (D-NY-25) discussed the positive impacts of
phasing out 14(c) for individuals with disabilities who move
into competitive, integrated employment:
Mr. Morelle: [. . .] Let me just in closing, six
States, as you mentioned, have completed or are in the
process of phasing out 14(c). I think Vermont and New
Hampshire have completely phased out. Maryland, Alaska,
Oregon and Rhode Island are in the process of it, and I
understand Hawaii and Kentucky are at least considering
it.
Can you just talk about the other benefits
individuals with disabilities experience other than
financial benefits from the phasing out of 14(c) and
moving into a competitive integrated employment
setting?
Ms. Gupta: Yes. I mean, so much of what we are
talking about today is really about the dignity of work
and people with disabilities feeling the dignity of
being human beings entitled to the same protections as
any other people in this country and being able to
participate in the mainstream economy with people
without disabilities, to have the opportunity, to have
equal opportunity for jobs and housing and the like.
And that this move from the ADA to Olmstead and beyond
is really about ensuring that people with disabilities
have equal opportunity and are not kind of considered,
you know, folks to be segregated out of the mainstream
economy.\163\
---------------------------------------------------------------------------
\163\House Comm. on Educ. and Labor, Gradually Raising the Minimum
Wage to $15: Good for Workers, Good for Business, Good for the Economy,
YouTube (Feb. 7, 2019), https://www.youtube.com/watch?v=JDGkim7aaHI
(question and answer between Mr. Morelle and Ms. Gupta at 6:28:06).
---------------------------------------------------------------------------
The subminimum wage for workers under 20 years of age
Under the FLSA, an employer may pay employees under 20
years of age a subminimum wage of $4.25 an hour for the first
90 calendar days of employment. This provision was added to the
FLSA in 1996\164\ based on the false assumptions that an
increase in the federal minimum wage leads to increased
unemployment among teenagers.\165\ However, research shows that
minimum wage increases do not reduce employment among
teenagers.\166\ In fact, research suggests a higher minimum
wage may be especially beneficial for teenaged workers of color
who often have higher barriers to employment and may be unable
to afford the supports and services they need, such as
transportation, to seek and maintain employment.\167\
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\164\Fair Labor Standards Amendments of 1966, P.L. 89-601, 80 Stat.
830.
\165\42 Cong. Rec. H9850 (daily ed. Aug. 2, 1996) (statement of
Representative Goodling). The 1996 Amendments to the Fair Labor
Standards Act (H.R. 3448) contained the permanent provision for a youth
minimum wage. This language was based on House Amendment 1085 offered
by Rep. Goodling for H.R. 1227 (104th Congress), approved May 23, 1996.
During debate of H.R. 3448, Representative Goodling stated ``Many
studies support the conclusion that a mandated increase in the minimum
wage would jeopardize . . . young Americans looking for their first
job. . .'' Id.
\166\Sylvia A. Allegretto et al., Do Minimum Wages Really Reduce
Teen Employment? 50 (2) Industrial Relations 205, 221 (2011), http://
irle.berkeley.edu/files/2011/Do-Minimum-Wages-Really-Reduce-Teen-
Employment.pdf; Arindrajit Dube et al., supra note 116 at 699.
\167\Allegretto et al., supra note 166, at 228.
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The subminimum was also established with the purpose of
creating job opportunities for young workers.\168\ However,
there is no employer reporting of the use of the youth minimum
wage, and it is believed to be rarely used. As Dr. Reich
testified at the February 7th hearing, ``[t]hese considerations
suggest that the federal youth subminimum wage is not
accomplishing its intended purpose.''\169\
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\168\``The opportunity wage allows employers to pay new hires under
the age of 20 not less than $4.25 per hour for the first 90 calendar
days of employment. This will encourage employers to hire new workers .
. . .'' Conference Report On H.R. 3448, supra note 163.
\169\Reich Testimony at 17.
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Many teenage workers are from low-income families, and
their earnings are an important contribution to their
households' incomes. Mr. Brodeur testified at the February 7th
hearing about the decision to reject a subminimum wage for teen
workers when increasing the state's minimum wage:
Initially, I was intrigued by the concept, and from
my efforts on workforce development issues as well as
my own experience, I understood the lifelong benefits
of learning the value and dignity of work at a young
age. However, as I continued to meet with my
constituents and review expert testimony submitted to
my committee, I again determined that this policy would
adversely impact the very population it was designed to
help. Among families in Massachusetts whose earnings
are at the bottom 20th percentile, teen workers bring
home nearly 18% of the family income. These teens are
not merely working a summer job for extra spending
money, but are instead functioning as breadwinners for
their families. To tell these hardworking young people
that their work product or services, which might be
rendered alongside and identical to those of an older
worker, are somehow less valuable because of their age
was unacceptable to me.\170\
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\170\Broduer Testimony at 4 (internal citation omitted).
Eliminating the subminimum wage for teenaged workers and
raising the minimum wage generally may also help improve
educational outcomes. For young workers, increased earnings may
reduce the likelihood of working substantial hours while in
school, helping them better balance work and school. Mr. Wise
underscored this point during his testimony at the February 7th
---------------------------------------------------------------------------
hearing:
I was a great student and by the eighth grade was in
advanced placement classes. My teachers said,
``Terrence you're going to do great things. You can be
anything.'' I wanted to be a Gamecock at the University
of South Carolina. I was going to be a writer. But I
went to work at age 16 to try to help my family
survive. One day I came home from school, there were no
lights or food in the fridge and I couldn't do homework
without food and lights.
So I went and got my first job at Taco Bell. I only
made $4.25 an hour, which I believe was the minimum
wage at the time but I knew my family needed the
money--desperately. My first paycheck was $150. It went
to the light bill. One job wasn't enough. So I got a
second job at Wendy's to bring in more money for my
family. I tried to balance both work and school. I had
As in AP History, English, Science, and Math. I started
falling asleep in class. My teachers asked, ``Terrence,
what's wrong?'' I told them I was working two jobs. I
didn't need my AP Calculus to run the numbers at home.
There simply wasn't enough money for basic necessities.
I had left school and my dream of college behind. At
17, I became a full-time worker and was left with no
other choice but to dropout of school.\171\
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\171\Wise Testimony at 1.
Nearly half of U.S. students pursuing a two-year degree,
and over 40 percent of students pursuing a four-year degree,
work more than 35 hours per week.\172\ Studies show that
working more than 20 hours per week puts college students at
risk of dropping out.\173\
---------------------------------------------------------------------------
\172\U.S. Dep't of Educ., Profile of Undergraduate Students: 2011-
12 5 (2014), https://nces.ed.gov/pubs2015/2015167.pdf.
\173\Elisabeth Hovdhaugen, Working While Studying: the Impact of
Term-time Employment on Dropout Rates, 28 Journal of Educ. and Work
631, 631-51 (2015).
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Ms. Gupta also testified at the February 7th hearing that
Congress should be concerned about the ``potential negative
consequences of the youth minimum wage on food insecurity faced
by too many college students today.''\174\ A 2018 Wisconsin
HOPE Lab survey of 43,000 students at 66 institutions in 20
states and the District of Columbia found that 36 percent of
students at 4-year institutions were food insecure, including
47 percent of Black students, 42 percent of Hispanic students,
and 46 percent of Pell Grant recipients.\175\
---------------------------------------------------------------------------
\174\Vanita Testimony at 8.
\175\Vanessa Romo, Hunger and Homelessness are Widespread Among
College Students, Study Finds, Nat'l Pub. Radio (April 3, 2018, 8:48
PM), https://www.npr.org/sections/thetwo-way/2018/04/03/599197919/
hunger-and-homelessness-are-widespread-among-college-students-study-
finds.
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FEDERAL ACTION IS NEEDED TO ENSURE THE MINIMUM WAGE IS A STRONG,
UNIFORM FEDERAL WAGE FLOOR
The FLSA sets a federal floor for the minimum wage, and
states and localities are free to build upon that floor and
establish higher minimum wages. In states with weak labor
standards or low union density, a federal minimum wage may be
the only effective labor market institution that elevates wages
for low-paid workers. The fact that wages are lower in states
with weaker labor standards suggests that a wage floor has a
greater impact for workers in those states. Restoring the value
of the federal minimum wage to ensure the minimum wage is a
strong, uniform federal wage floor is key for these workers.
Raising the federal minimum wage to $15 by 2024, as H.R.
582 would do, creates a strong national wage that will protect
covered workers no matter where they live. By 2024, $15 an hour
(the equivalent of approximately $13 in 2019 dollars) is the
minimum amount a single adult working full time will need to
earn to cover basic living expenses.\176\ Even in the area with
the lowest cost of living in the country Beckley, West
Virginia\177\ in 2024, a two-parent, two-child household in
which both parents earn $15 an hour and pay taxes will only
have $1 left each month after covering basic living expenses,
according to calculations based on MIT's Living Wage
Calculator.\178\ As Dr. Zipperer testified at the February 7th
hearing:
---------------------------------------------------------------------------
\176\Nat'l Emp't Law Project, Workers in all 50 States will Need
$15 an Hour by 2024 to Afford the Basics 1 (2017), https://
s27147.pcdn.co/wp-content/uploads/workers-in-all-50-states-will-need-
15-by-2024.pdf.
\177\As determined by the Census Bureau.
\178\Living Wage Calculator, Massachusetts Institute of Technology,
http://livingwage.mit.edu.
By 2024, in areas all across the United States, even
a single adult with no children will need to be earning
more than $15 per hour on a full-time, full-year basis
in order to achieve a modest but adequate standard of
living . . . [e]arning at least $15 per hour will be a
necessity for parents who wish to raise families. Two
adults working 40 hours a week at $15 per hour will
earn $62,400 per year. If these two adults have two
children to care for, by 2024 there will be no area in
the country where they can live and meet the basic
requirements of their family budget with wage income
alone.\179\
---------------------------------------------------------------------------
\179\Zipperer Testimony 6.
Failing to ensure workers across the country have a strong,
uniform wage floor risks workers falling farther behind. This
is especially true where states enact preemption laws to block
local efforts to increase the minimum wage at the municipal or
county level. Currently, 17 of the 21 states at the $7.25 an
hour federal minimum have enacted preemption laws. During her
testimony at the February 7th hearing, Ms. Eckhouse lamented
how her home state of Iowa enacted a law preventing cities and
counties from setting a higher minimum wage, even as the state
is unlikely to raise its minimum wage above the current federal
rate of $7.25 an hour. Ms. Eckhouse stated that ``[w]e need a
federal increase to ensure that wherever people live and work
in Iowa or around the country, they can meet their basic
needs.''\180\ Mr. Wise also testified about his state's efforts
to block local increases to the minimum wage at the February
7th hearing:
---------------------------------------------------------------------------
\180\Eckhouse Testimony at 2.
75% of voters in Kansas City voted for a $15 minimum
wage in 2017. Workers won that victory by taking big,
bold, and dramatic actions like going on strike,
marching, and sleeping on the steps of City Hall for a
week in our ``Fast for $15.'' It was a huge victory for
us until the state legislature pre-empted the minimum
wage, returning it to $7.65. Missouri voters increased
the minimum wage in 2018 but we're still not achieving
$15 per hour--the minimum we need to support our
families. That's why we need Congress to take action
immediately to raise the federal minimum wage.\181\
---------------------------------------------------------------------------
\181\Wise Testimony at 3.
Ms. Gupta, during her testimony at the February 7th
hearing, highlighted a similar occurrence in Alabama, where
state legislators in Alabama nullified the Birmingham City
Council's vote to increase the minimum wage--an effort led by
workers and faith leaders.\182\ Ms. Gupta quoted Derrick
Johnson, CEO of the NAACP, who noted, ``[t]he state's
legislature must be held accountable for discriminating against
hard working Birmingham citizens fighting to get out of
poverty.''\183\
---------------------------------------------------------------------------
\182\Several worker advocacy groups and civil rights groups have
challenged the state legislature's actions in court.
\183\Gupta Testimony at 9.
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A regionalized minimum wage would leave workers and communities behind
The notion of a regionalized minimum wage is not new.
During the debates leading up to the passage of the FLSA,
Southern legislators who feared a national wage floor would
create wage equity between white workers and workers of color
proposed a regional approach that would have maintained racial
wage disparities.\184\ Civil rights leaders at the time
strongly opposed this approach, and Congress ultimately
rejected a regional approach. In fact, every time Congress has
considered a regional approach, it has rejected it.
---------------------------------------------------------------------------
\184\See Sean Farhang & Ira Katznelson, The Southern Imposition:
Congress and Labor in the New Deal and Fair Deal 19 (2005), https://
gspp.berkeley.edu/assets/uploads/research/pdf/article_4.pdf.
---------------------------------------------------------------------------
A regionalized minimum wage would permanently lock in lower
wages, especially in certain Southern states where depressed
wages are a result of a history of racially discriminatory
policies. As Ms. Gupta testified at the February 7th hearing,
``[t]en of the 21 states stuck at $7.25 an hour are in the
South, with large African American populations, and growing
Latino and Asian American populations.''\185\ Analysis of a
recent proposal to regionalize the minimum wage found that 15.6
million fewer workers would receive a raise than under H.R.
582, and over one-third of those left behind--5.6 million--
would be women of color.\186\ As Dr. Spriggs testified at the
February 7th hearing:
---------------------------------------------------------------------------
\185\Gupta Testimony at 9 (internal citation omitted).
\186\Econ. Policy Inst. et al., The Federal Minimum Wage Should be
a Robust National Wage Floor, Not Adjusted Region by Region 2 (2019),
https://www.epi.org/files/uploads/minimum-wage-fact-sheet-2019.pdf.
If you agree to those regional pay ideas, which
Congress debated extensively in 1937 and rejected,
extensively in 1966 and rejected, you won't be
accepting a new idea, you will be cementing an old idea
that got rejected twice and you will create a racial
pay disparity. It will be, once again, America
understands the problem, we are going to pass a labor
law that improves the lives of American workers, and
Black workers will be told, the bus is full when it
pulls out. If you do that, that is what you will be
doing.\187\
---------------------------------------------------------------------------
\187\House Comm. on Educ. and Labor, Gradually Raising the Minimum
Wage to $15: Good for Workers, Good for Business, Good for the Economy,
YouTube (Feb. 7, 2019), https://www.youtube.com/watch?v=JDGkim7aaHI
(statement by Dr. Spriggs at 3:09:40).
A regionalized minimum wage would weaken the federal
minimum wage as a counterweight to outsized employer bargaining
power, especially in rural areas. Research suggests that low
wages for employees in low-wage industries can often be
attributed to the employer's bargaining power to set low wages,
rather than an employee's work experience or education.\188\ A
strong national floor serves as a counterweight to this
bargaining power, while lower federal minimum wages based on
region lock in this wage depression. A single national minimum
wage as a counterweight is especially important for small-towns
or rural areas where often only a few companies are the main
source of employment and thus are able to keep wages low for
entire regions.
---------------------------------------------------------------------------
\188\John Abowd et al., Persistent Inter-industry Wage Differences:
Rent Sharing and Opportunity Costs, IZA Journal of Labor Econs. 1, 22
(2012).
---------------------------------------------------------------------------
A regional minimum wage would rob low-wage states and areas
of economic stimulus. As discussed above, when low-wage workers
have increases in income, they spend that money locally,
stimulating their local economies. Because the increases in
income will be larger for workers in low-wage states and areas,
these places will also benefit from a greater stimulus effect.
Creating a lower minimum wage for these areas deprives these
local economies of the full economic stimulus of minimum wage
increases. Additionally, higher minimum wages can also help
states keep workers who are in their prime earning years,
leaving these states with a better-quality workforce that
attracts businesses into the state.\189\
---------------------------------------------------------------------------
\189\Reich Testimony at 14.
---------------------------------------------------------------------------
In fact, by rejecting a regional approach in the 1930s and
1960s and setting a strong national standard, Congress had a
positive, dynamic effect on economies in the South. As Dr.
Reich testified at the February 7th hearing:
By establishing a single national floor at a time of
other major economic transformations, Congress set in
motion a series of substantial positive economic
changes in the South. In particular, the isolated
economies of the rural South became more linked to the
national economy. The South prospered in succeeding
decades, and the southern regional wage differential
became much smaller. A similar development occurred as
a result of the civil rights revolution and the
associated extension of Fair Labor Standard Act
coverage to more of the South's industries [sic].\190\
---------------------------------------------------------------------------
\190\Reich Testimony at 16 (citation omitted).
This positive impact of a strong, uniform federal minimum
wage floor on the Southern economy could continue. For example,
recent research evaluating the impact of a $15 an hour minimum
wage in 2024 on Mississippi estimates a net gain in employment
of approximately 2,000 jobs by 2024. This would be equal to 0.1
percent of total employment in Mississippi.\191\
---------------------------------------------------------------------------
\191\Michael Reich et al., The Employment Effects of a $15 Minimum
Wage in the U.S. and in Mississippi: A Simulation Approach 42 (2019),
http://irle.berkeley.edu/files/2019/02/The-Employment-Effects-of-a-15-
Minimum-Wage-in-the-US-and-in-Mississippi.pdf.
---------------------------------------------------------------------------
The Committee is also concerned that a regional minimum
wage would hamper DOL's enforcement of the federal minimum
wage, making it harder to ensure workers get the pay they are
owed. Already, DOL has limited resources for ensuring workers
are paid federal minimum wage. It is unclear how a multiplicity
of regional federal minimum wages will impact the time and
resources needed to investigate and enforce minimum wage
standards, especially for employers that operate in multiple
metropolitan statistical areas within a given state or region.
Section-by-Section Analysis
Section 1. Short title
This section states that the title of the bill is the Raise
the Wage Act (the Act).
Section 2. Minimum wage increases
Federal Minimum Wage. The Act increases the federal minimum
wage ``6(a)(1) wage.'' for employees over a six-year period. In
the first year (2019), the federal minimum wage will increase
by $1.30 from $7.25 to $8.55 per hour. This increase will occur
on the first day of the third month that begins after the date
of enactment of the Act (the effective date). One year after
the effective date, the minimum wage will increase by $1.30 to
$9.85; two years after the effective date it will increase by
$1.30 to $11.15; three years after the effective date, it will
increase by $1.30 to $12.45; four years after the effective
date, it will increase by $1.30 to $13.75; and five years after
the effective date, the minimum wage will increase by $1.25 to
$15.00. Six years after the effective date (2025), the minimum
wage will be indexed to median wages.
Annual Indexing of Minimum Wage Based on Median Wages. Six
years after enactment, and each subsequent year, the minimum
wage will increase based on the percentage increase, if any, in
the median hourly wages of all employees. The Secretary of
Labor, through the Bureau of Labor Statistics (BLS), will
calculate this change by compiling data on the hourly wages of
all employees. The minimum wage will not decrease based on BLS'
calculation.
Section 3. Tipped employees
The Act increases the tipped wage from $2.13 to $3.60 in
2019. For each succeeding year, the Act increases the tipped
wage by the lesser of either $1.50 or the difference between
the tipped wage and the 6(a)(1) wage. Once the tipped wage
reaches the 6(a)(1) wage in 2027, the Act eliminates the tipped
wage by stipulating that the tipped wage will be the 6(a)(1)
wage.
This section also clarifies that any employee has the right
to retain any tips received by such employee.
Section 4. Newly hired employees who are less than 20 years old
The Act increases the minimum wage for youth under 20 years
of age from $4.25 to $5.50 in 2019. Each subsequent year, the
Act increases the youth wage by the lesser of either $1.25 or
the difference between the youth wage and the 6(a)(1) wage.
Once the youth wage reaches the 6(a)(1) wage in 2027, the Act
eliminates the youth wage by stipulating that the youth wage
will be the 6(a)(1) wage.
Section 5. Publication of notice of changes to the minimum wage
The Act requires the Secretary of Labor to publish in the
Federal Register and on DOL's website announcements of the
increases in the 6(a)(1), tipped, 14(c), and youth wages sixty
days prior to each effective date.
Section 6. Promoting economic self-sufficiency for individuals with
disabilities
The Secretary of Labor will discontinue issuing 14(c)
certificates on the date of enactment of the Act. Existing
14(c) certificate holders will be permitted to continue using
their subminimum wage certificates for six years after
enactment. Certificate holders will increase the hourly wages
paid to individuals with disabilities who are being paid
subminimum wages pursuant to 14(c) on the following schedule:
one year after the 6(a)(1) wage takes effect (the effective
date), the subminimum wage paid shall be at least $4.25; two
years after the effective date, the subminimum wage paid shall
be at least $6.40; three years after the effective date, the
subminimum wage paid shall be at least $8.55; four years after
the effective date, the subminimum wage paid shall be at least
$10.70; and five years after the effective date, the subminimum
wage paid shall be at least $12.85. Six years after the
effective date, the subminimum wage paid to 14(c) covered
employees must be the same as the 6(a)(1) wage. During the six
years of transition to the 6(a)(1) wage, the Secretary of Labor
shall, upon request, assist certificate holders with compliance
and continuing employment opportunities for individuals with
disabilities.
Section 7. General effective date
Unless otherwise provided for in the Act, the amendments
made by the Act take effect on the first day of the third month
that begins after the date of enactment. The effective date in
the Commonwealth of the Northern Mariana Islands is 18 months
after the Act's general effective date.
Section 8. GAO report
The Act requires the Government Accountability Office (GAO)
to review the economic conditions in the Commonwealth of the
Northern Mariana Islands, estimate the proportion of employees
directly affected by wage increases under the Act
(disaggregated by industry and occupation), and submit a report
to Congress within one year after H.R. 582's enactment.
Explanation of Amendments
The Amendment in the Nature of a Substitute is explained in
the descriptive portions of this report.
Application of Law to the Legislative Branch
Pursuant to section 102(b)(3) of the Congressional
Accountability Act, Pub. L. No. 104-1, H.R. 582, as amended,
applies to terms and conditions of employment within the
legislative branch by amending the FLSA.
Unfunded Mandate Statement
Pursuant to Section 423 of the Congressional Budget and
Impoundment Control Act (as amended by Section 101(a)(2) of the
Unfunded Mandates Reform Act, Pub. L. No. 104-4), the Committee
adopts as its own the estimate of and statement regarding
federal mandates in H.R. 582, as amended, prepared by the
Director of the Congressional Budget Office.
Earmark Statement
In accordance with clause 9 of rule XXI of the Rules of the
House of Representatives, H.R. 582 does not contain any
congressional earmarks, limited tax benefits, or limited tariff
benefits as described in clauses 9(e), 9(f), and 9(g) of rule
XXI.
Roll Call Votes
In compliance with clause 3(b) of rule XIII of the Rules of
the House of Representatives, the Committee advises that the
following roll call votes occurred during the Committee's
consideration of H.R. 582:
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Statement of Performance Goals and Objectives
Pursuant to clause (3)(c) of rule XIII of the Rules of the
House of Representatives, H.R. 582 would update current law to
increase the federal minimum wage, phase out subminimum wages
for teenaged and tipped workers, and eliminate subminimum wage
certificates for individuals with disabilities in an effort to
increase workers' wages, decrease poverty, and stimulate local
economies.
Duplication of Federal Programs
Pursuant to clause 3(c)(5) of rule XIII of the Rules of the
House of Representatives, the Committee states that no
provision of H.R. 582 establishes or reauthorizes a program of
the Federal Government known to be duplicative of another
federal program, a program that was included in any report from
the Government Accountability Office to Congress pursuant to
section 21 of Public Law 111-139, or a program related to a
program identified in the most recent Catalog of Federal
Domestic Assistance.
Hearings
Pursuant to section 103(i) of H. Res. 6 for the 116th
Congress, the Committee held a legislative hearing entitled
``Gradually Raising the Minimum Wage to $15: Good for Workers,
Good for Businesses, and Good for the Economy,'' which was used
to consider H.R. 582. The Committee heard testimony on the
declining value of the federal minimum wage and its impact on
workers, how increasing the minimum wage will raise wages for
workers with little to no negative employment impacts, and the
benefits to businesses and local economies from minimum wage
increases. The Committee heard testimony from Dr. William
Spriggs, Chief Economist at the AFL-CIO; Mr. Terrence Wise, a
shift manager at McDonald's; Dr. Douglas Holtz-Eakin, President
of the American Action Forum; Dr. Ben Zipperer, Economist at
the Economic Policy Institute; Ms. Vanita Gupta, President and
CEO of the Leadership Conference on Civil and Human Rights; Ms.
Simone Barron, a server in a full service restaurant; Ms. Kathy
Eckhouse, owner of La Quercia; Dr. Michael Strain, Resident
Scholar and Director of Economic Policy Studies at the American
Enterprise Institute; Dr. Michael Reich, Professor at
University of California Berkeley; and Mr. Paul Brodeur,
Massachusetts State Representative.
Statement of Oversight Findings and Recommendations of the Committee
In compliance with clause 3(c)(1) of rule XIII and clause
2(b)(1) of rule X of the Rules of the House of Representatives,
the Committee's oversight findings and recommendations are
reflected in the descriptive portions of this report.
New Budget Authority and CBO Cost Estimate
Pursuant to clause 3(c)(2) of rule XIII of the Rules of the
House of Representatives and section 308(a) of the
Congressional Budget Act of 1974, and pursuant to clause
3(c)(3) of rule XIII of the Rules of the House of
Representatives and section 402 of the Congressional Budget Act
of 1974, the Committee has received the following estimate for
H.R. 582 from the Director of the Congressional Budget Office:
U.S. Congress,
Congressional Budget Office,
Washington, DC, April 22, 2019.
Hon. Bobby Scott,
Chairman, Committee on Education and Labor,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 582, the Raise the
Wage Act.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Meredith
Decker.
Sincerely,
Mark P. Hadley,
(For Keith Hall, Director).
Enclosure.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
The bill would
Increase the federal minimum wage in six
annual steps, from $7.25 per hour to $15 per hour, and
then adjust the wage annually thereafter to keep pace
with the median hourly wage
Increase spending subject to appropriation
by increasing the wages of some federal workers
Increase off-budget direct spending by
increasing the wages of some postal workers
Impose intergovernmental and private-sector
mandates by requiring employers to pay a higher minimum
wage to employees who are covered under the Fair Labor
Standards Act
Estimated budgetary effects would primarily stem from
Increasing the wages of some federal
employees
Areas of significant uncertainty include
Projections of increases in the median
hourly wage and wage growth for federal workers over
the next decade
Bill summary: H.R. 582 would amend the Fair Labor Standards
Act (FLSA) to increase the federal minimum wage in six annual
steps from $7.25 per hour to $15 per hour in 2025 (shortly
after enactment, the minimum wage would be $8.55 per hour).
After 2025, the minimum wage would be adjusted annually to
account for changes in the median hourly wage of all workers.
By 2029, the minimum wage would be $16.82, CBO estimates. In
addition, the bill would repeal the separate federal minimum
cash wage for workers who receive tips by gradually raising
that wage until it equals the federal minimum wage for
nontipped workers. Finally, H.R. 582 would repeal the separate
minimum wage for teenage workers and workers with disabilities
by raising their wages gradually to equal the federal minimum
wage.
Estimated Federal cost: The estimated budgetary effect of
H.R. 582 is shown in Table 1. The costs of the legislation fall
within all budget functions except 950 (undistributed
offsetting receipts).
TABLE 1.--ESTIMATED BUDGETARY EFFECTS OF H.R. 582
--------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, millions of dollars--
-------------------------------------------------------------------------------------------------
2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2019-2024 019-2029
--------------------------------------------------------------------------------------------------------------------------------------------------------
Increases in Off-Budget Direct Spending
Estimated Budget Authority............................ 0 0 0 0 * * * * * * * * 1
Estimated Outlays..................................... 0 0 0 0 * * * * * * * * 1
Increases in Spending Subject to Appropriation
Estimated Authorization............................... 0 * * 1 2 6 11 14 14 14 14 9 76
Estimated Outlays..................................... 0 * * 1 2 6 11 14 14 14 14 9 76
--------------------------------------------------------------------------------------------------------------------------------------------------------
* = between zero and $500,000.
Basis of estimate: For this estimate, CBO assumes that the
legislation will be enacted by October 1, 2019, and that
starting in 2020, the minimum wage would rise incrementally,
reaching $15 in 2025. In subsequent years, the minimum wage
would increase to keep pace with the increase in median hourly
earnings.
Increasing the minimum wage would directly affect the
federal budget by raising the pay of a small group of federal
employees who are paid an hourly wage. This estimate accounts
only for those direct effects on the budget.
H.R. 582 also would indirectly affect the budget by
boosting the prices of some goods and services that the
government purchases. Tax receipts and federal spending for
health and income security programs also would be indirectly
affected as income increases for some people and falls for
others. Without further analysis, CBO cannot estimate whether
the net result of those indirect effects over the coming decade
would be to increase or decrease budget deficits.
Direct spending (off-budget): Currently, all Postal Service
employees earn more than $8.55 per hour. Using information from
the Postal Service, CBO estimates that under H.R. 582, about
100 employees would receive pay increases to minimum hourly
rates starting in 2023. CBO estimates that raising wages for
the affected workers in step with the provisions of H.R. 582
would increase direct spending by less than $150,000 per year
over the 2023-2029 period, with a cumulative cost of about
$700,000 over the 2020-2029 period. Changes in the cost of
operating the Postal Service are reflected in the unified
budget as changes in direct spending. The Postal Service
operations are designated as off-budget.
Spending Subject to Appropriation: Implementing H.R. 582
would increase spending subject to appropriation by $76 million
over the next 10 years, CBO estimates. Using information from
the Office of Personnel Management, CBO estimates that fewer
than 100 workers initially would see a pay increase. As the
minimum wage increased over time, however, more workers' pay
would rise, and by the end of 2029, nearly 7,000 workers' wages
would increase. For most affected employees, the pay raise
would be less than 50 cents per hour, but for others the raise
could be as much as $10 per hour.
Uncertainty: The uncertainty in this estimate depends in
part on CBO's projections of various measures of wage growth.
CBO uses the employment cost index to project wage growth for
federal employees because current law explicitly links federal
employee pay to that index. After reaching $15 per hour in
2025, however, increases in the minimum wage would depend on
growth in median wages. Thus, if growth in one of those two
measures diverged significantly from the other, outlays could
be greater or smaller than CBO estimated.
Over the past 10 years, policymakers have in some cases
constrained increases in federal pay that would have otherwise
occurred because of changes in the employment cost index. If
that trend continued, increases in the minimum wage would
probably outpace federal wage increases, and a larger group of
federal employees would see faster increases in their wages.
Pay-As-You-Go considerations: The Statutory Pay-As-You-Go
Act of 2010 establishes budget-reporting and enforcement
procedures for legislation affecting direct spending or
revenues. Only on-budget changes to outlays or revenues are
subject to pay-as-you-go procedures. Spending for the Postal
Service is classified as off-budget, therefore H.R, 582 is not
subject to pay-as-you-go procedures.
Increase in long-term deficits: CBO estimates that enacting
H.R. 582 would not increase on-budget deficits in any of the
four consecutive 10-year periods beginning in 2030.
Mandates: H.R. 582 would impose intergovernmental and
private-sector mandates as defined in the Unfunded Mandates
Reform Act (UMRA) by requiring employers whose workers are
covered under the FLSA to pay a higher minimum wage.
CBO estimates that the aggregate additional amount paid to
those workers to meet the new minimum wage requirements would
significantly exceed the thresholds established in UMRA for
private-sector and intergovernmental entities in each year
beginning in 2020 and 2021, respectively. In 2019, the
intergovernmental threshold under UMRA is $82 million and the
private-sector threshold is $164 million; both are adjusted
annually for inflation.
CBO estimates that by 2025--when the minimum wage under
H.R. 582 reaches $15 per hour--state, local, and tribal
employers would be required to pay covered workers $3 billion
in additional wages annually; the additional annual cost to
private-sector employers would be $48 billion. Those amounts do
not account for employers' possible responses to the higher
wage requirements, which could include reducing hiring, among
other responses. If employers respond by taking such actions,
CBO expects the costs to be lower, but still significantly
higher than the thresholds established in UMRA.
CBO estimated the cost of the mandates using monthly data
from the Census Bureau's Current Population Survey to estimate
the distribution of workers' hourly wages under current law. In
projecting future hourly wages, CBO accounted for prospective
increases in some states' minimum wage rates, including those
coming into effect under current and future state law.
CBO then identified the subset of workers covered under the
FLSA whose hourly wages, in CBO's projections, would fall below
the schedule of minimum wages set by H.R. 582. For this
analysis, CBO excluded workers who are not covered by the
FLSA--including those in most small businesses and in
occupations that generally are exempt from the FLSA under
current law--and workers whose wages would be more than $15 per
hour in 2025. For both of those types of workers, CBO expects
that employers would incur additional costs to increase wages,
but such costs would not directly result from the employers'
compliance with the mandate.
Estimate prepared by: Federal costs: Meredith Decker, Mark
Grabowicz, Daniel Ready; Mandates: Nabeel Alsalam, Andrew
Laughlin.
Estimate reviewed by: Christi Hawley Anthony, Chief,
Projections; Sheila Dacey, Chief, Income Security and
Education; Susan Willie, Chief, Mandates; Kim Cawley, Chief,
Natural and Physical Resources; H. Samuel Papenfuss, Deputy
Assistant Director for Budget Analysis; Theresa Gullo,
Assistant Director for Budget Analysis.
Committee Cost Estimate
Clause 3(d)(1) of rule XIII of the Rules of the House of
Representatives requires an estimate and a comparison of the
costs that would be incurred in carrying out H.R. 582. However,
clause 3(d)(2)(B) of that rule provides that this requirement
does not apply when the committee has included in its report a
timely submitted cost estimate of the bill prepared by the
Director of the Congressional Budget Office under section 402
of the Congressional Budget Act.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, H.R. 582, as reported, are shown as follows:
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italics, and existing law in which no
change is proposed is shown in roman):
FAIR LABOR STANDARDS ACT OF 1938
* * * * * * *
definitions
Sec. 3. As used in this Act--
(a) ``Person'' means an individual, partnership, association,
corporation, business trust, legal representative, or any
organized group of persons.
(b) ``Commerce'' means trade, commerce, transportation,
transmission, or communication among the several States or
between any State and any place outside thereof.
(c) ``State'' means any State of the United States or the
District of Columbia or any Territory or possession of the
United States.
(d) ``Employer'' includes any person acting directly or
indirectly in the interest of an employer in relation to an
employee and includes a public agency, but does not include any
labor organization (other than when acting as an employer) or
anyone acting in the capacity of officer or agent of such labor
organization.
(e)(1) Except as provided in paragraphs (2), (3), and (4),
the term ``employee'' means any individual employed by an
employer.
(2) In the case of an individual employed by a public agency,
such term means--
(A) any individual employed by the Government of the
United States--
(i) as a civilian in the military departments
(as defined in section 102 of title 5, United
States Code),
(ii) in any executive agency (as defined in
section 105 of such title),
(iii) in any unit of the judicial branch of
the Government which has positions in the
competitive service,
(iv) in a nonappropriated fund
instrumentality under the jurisdiction of the
Armed Forces,
(v) in the Library of Congress, or
(vi) the Government Printing Office;
(B) any individual employed by the United States
Postal Service or the Postal Rate Commission; and
(C) any individual employed by a State, political
subdivision of a State, or an interstate governmental
agency, other than such an individual--
(i) who is not subject to the civil service
laws of the State, political subdivision, or
agency which employs him; and
(ii) who--
(I) holds a public elective office of
that State, political subdivision, or
agency,
(II) is selected by the holder of
such an office to be a member of his
personal staff,
(III) is appointed by such an
officeholder to serve on a policymaking
level,
(IV) is an immediate adviser to such
an officeholder with respect to the
constitutional or legal powers of his
office, or
(V) is an employee in the legislative
branch or legislative body of that
State, political subdivision, or agency
and is not employed by the legislative
library of such State, political
subdivision, or agency.
(3) For purposes of subsection (u), such term does not
include any individual employed by an employer engaged in
agriculture if such individual is the parent, spouse, child, or
other member of the employer's immediate family.
(4)(A) The term ``employee'' does not include any individual
who volunteers to perform services for a public agency which is
a State, a political subdivision of a State, or an interstate
governmental agency, if--
(i) the individual receives no compensation or is
paid expenses, reasonable benefits, or a nominal fee to
perform the services for which the individual
volunteered; and
(ii) such services are not the same type of services
which the individual is employed to perform for such
public agency.
(B) An employee of a public agency which is a State,
political subdivision of a State, or an interstate governmental
agency may volunteer to perform services for any other State,
political subdivision, or interstate governmental agency,
including a State, political subdivision or agency with which
the employing State, political subdivision, or agency has a
mutual aid agreement.
(5) The term ``employee'' does not include individuals who
volunteer their services solely for humanitarian purposes to
private non-profit food banks and who receive from the food
banks groceries.
(f) ``Agriculture'' includes farming in all its branches and
among other things includes the cultivation and tillage of the
soil, dairying, the production, cultivation, growing, and
harvesting of any agricultural or horticultural commodities
(including commodities defined as agricultural commodities in
section 15(g) of the Agricultural Marketing Act, as amended),
the raising of livestock, bees, fur-bearing animals, or
poultry, and any practices (including any forestry or lumbering
operations) performed by a farmer or on a farm as an incident
to or in conjunction with such farming operations, including
preparation for market, delivery to storage or to market or to
carriers for transportation to market.
(g) ``Employ'' includes to suffer or permit to work.
(h) ``Industry'' means a trade, business, industry, or other
activity, or branch or group thereof, in which individuals are
gainfully employed.
(i) ``Goods'' means goods (including ships and marine
equipment), wares, products, commodities, merchandise, or
articles or subjects of commerce of any character, or any part
or ingredient thereof, but does not include goods after their
delivery into the actual physical possession of the ultimate
consumer thereof other than a producer, manufacturer, or
processor thereof.
(j) ``Producer'' means produced, manufactured, mined,
handled, or in any manner worked on in any State; and for the
purposes of this Act an employee shall be deemed to have been
engaged in the production of goods if such employee was
employed in producing, manufacturing, mining, handling,
transporting, or in any other manner working on such goods, or
in any closely related process or occupation directly essential
to the production thereof, in any State.
(k) ``Sale'' or ``sell'' includes any sale, exchange,
contract to sell, consignment for sale, shipment for sale, or
other disposition.
(l) ``Oppressive child labor'' means a condition of
employment under which (1) any employee under the age of
sixteen years is employed by an employer (other than a parent
or a person standing in place of a parent employing his own
child or a child in his custody under the age of sixteen years
in an occupation other than manufacturing or mining or an
occupation found by the Secretary of Labor to be particularly
hazardous for the employment of children between the ages of
sixteen and eighteen years or detrimental to their health or
well-being) in any occupation, or (2) any employee between the
ages of sixteen and eighteen years is employed by an employer
in any occupation which the Secretary of Labor shall find and
by order declare to be particularly hazardous for the
employment of children between such ages or detrimental to
their health or well-being; but oppressive child labor shall
not be deemed to exist by virture of the employment in any
occupation of any person with respect to whom the employer
shall have on file an unexpired certificate issued and held
pursuant to regulations of the Secretary of Labor certifying
that such person is above the oppressive child labor age. The
Secretary of Labor shall provide by regulation or by order that
the employment of employees between the ages of fourteen and
sixteen years in occupations other than manufacturing and
mining shall not be deemed to constitute oppressive child labor
if and to the extent that the Secretary of Labor determines
that such employment is confined to periods which will not
interfere with their schooling and to conditions which will not
interfere with their health and well-being.
(m)(1) ``Wage'' paid to any employee includes the reasonable
cost, as determined by the Secretary of Labor, to the employer
of furnishing such employee with board, lodging, or other
facilities, if such board, lodging, or other facilities are
customarily furnished by such employer to his employees:
Provided, That the cost of board, lodging, or other facilities
shall not be included as a part of the wage paid to any
employee to the extent it is excluded therefrom under the terms
of a bona fide collective-bargaining agreement applicable to
the particular employee: Provided further, That the Secretary
is authorized to determine the fair value of such board,
lodging, or other facilities for defined classes of employees
and in defined areas, based on average cost to the employer or
to groups of employers similarly situated, or average value to
groups of employees, or other appropriate measures of fair
value. Such evaluations, where applicable and pertinent, shall
be used in lieu of actual measure of cost in determining the
wage paid to any employee.
(2)(A) In determining the wage an employer is required to pay
a tipped employee, the amount paid such employee by the
employee's employer shall be an amount equal to--
[(i) the cash wage paid such employee which for
purposes of such determination shall be not less than
the cash wage required to be paid such an employee on
the date of the enactment of this paragraph; and]
(i) the cash wage paid such employee, which for
purposes of such determination shall be not less than--
(I) for the 1-year period beginning on the
effective date under section 7 of the Raise the
Wage Act, $3.60 an hour;
(II) for each succeeding 1-year period until
the hourly wage under this clause equals the
wage in effect under section 6(a)(1) for such
period, an hourly wage equal to the amount
determined under this clause for the preceding
year, increased by the lesser of--
(aa) $1.50; or
(bb) the amount necessary for the
wage in effect under this clause to
equal the wage in effect under section
6(a)(1) for such period, rounded up to
the nearest multiple of $0.05; and
(III) for each succeeding 1-year period after
the increase made pursuant to subclause (II),
the minimum wage in effect under section
6(a)(1); and
(ii) an additional amount on account of the tips
received by such employee which amount is equal to the
difference between the wage specified in clause (i) and
the wage in effect under section 6(a)(1).
The additional amount on account of tips may not exceed the
value of the tips actually received by an employee. The
preceding 2 sentences shall not apply with respect to any
tipped employee unless such employee has been informed by the
employer of the provisions [of this subsection, and all tips
received by such employee have been retained by the employee]
of this subsection. Any employee shall have the right to retain
any tips received by such employee, except that this subsection
shall not be construed to prohibit the pooling of tips among
employees who customarily and regularly receive tips. An
employer shall inform each employee of the right and exception
provided under the preceding sentence.
[Subsections (a) and (b) of section 3 of H.R. 582 (as reported)
provides for amendments to section 3(m)(2)(A) of the Fair Labor
Standards Act of 1938, which are shown above. Subsection (c)(1)
of section 3 of H.R. 582 (as reported) also provides for
amendments to subparagraph (A) (as amended by subsections (a)
and (b) of such section 3). Paragraph (3) of section 3(c) of
H.R. 582 (as reported) provides: ``The amendments made by
paragraphs (1) and (2) shall take effect on the date that is
one day after the date on which the hourly wage under subclause
(III) of section 3(m)(2)(A)(i) of the Fair Labor Standards Act
of 1938 (29 U.S.C. 203(m)(2)(A)(i)), as amended by subsection
(a), takes effect.''. The following version of subparagraph (A)
reflects the amendments made to it by subsections (a), (b), and
(c)(1) of section 3 of H.R. 582.]
(A) [In determining the wage an employer is required to pay a
tipped employee, the amount paid such employee by the
employee's employer shall be an amount equal to--]
[(i) the cash wage paid such employee, which for
purposes of such determination shall be not less than--
[(I) for the 1-year period beginning on the
effective date under section 7 of the Raise the
Wage Act, $3.60 an hour;
[(II) for each succeeding 1-year period until
the hourly wage under this clause equals the
wage in effect under section 6(a)(1) for such
period, an hourly wage equal to the amount
determined under this clause for the preceding
year, increased by the lesser of--
[(aa) $1.50; or
[(bb) the amount necessary for the
wage in effect under this clause to
equal the wage in effect under section
6(a)(1) for such period, rounded up to
the nearest multiple of $0.05; and
[(III) for each succeeding 1-year period
after the increase made pursuant to subclause
(II), the minimum wage in effect under section
6(a)(1); and
[(ii) an additional amount on account of the tips
received by such employee which amount is equal to the
difference between the wage specified in clause (i) and
the wage in effect under section 6(a)(1).
The additional amount on account of tips may not exceed the
value of the tips actually received by an employee. The
preceding 2 sentences shall not apply with respect to any
tipped employee unless such employee has been informed by the
employer of the provisions of this subsection.] The wage
required to be paid to a tipped employee shall be the wage set
forth in section 6(a)(1). Any employee shall have the right to
retain any tips received by such employee, except that this
subsection shall not be construed to prohibit the pooling of
tips among employees who customarily and regularly receive
tips. An employer shall inform each employee of the right and
exception provided under the preceding sentence.
(B) An employer may not keep tips received by its employees
for any purposes, including allowing managers or supervisors to
keep any portion of employees' tips, regardless of whether or
not the employer takes a tip credit.
(n) ``Resale'' shall not include the sale of goods to be used
in residential or farm building construction, repair, or
maintenance: Provided, That the sale is recognized as a bona
fide retail sale in the industry.
(o) Hours Worked.--In determining for the purposes of
sections 6 and 7 the hours for which an employee is employed,
there shall be excluded any time spent in changing clothes or
washing at the beginning or end of each workday which was
excluded from measured working time during the week involved by
the express terms of or by custom or practice under a bona fide
collective-bargaining agreement applicable to the particular
employee.
(p) ``American vessel'' includes any vessel which is
documented or numbered under the laws of the United States.
(q) ``Secretary'' means the Secretary of Labor.
(r)(1) ``Enterprise'' means the related activities performed
(either through unified operation or common control) by any
person or persons for a common business purpose, and includes
all such activities whether performed in one or more
establishments or by one or more corporate or other
organizational units including departments of an establishment
operated through leasing arrangements, but shall not include
the related activities performed for such enterprise by an
independent contractor. Within the meaning of this subsection,
a retail or service establishment which is under independent
ownership shall not be deemed to be so operated or controlled
as to be other than a separate and distinct enterprise by
reason of any arrangement, which includes, but is not
necessarily limited to, an agreement, (A) that it will sell, or
sell only, certain goods specified by a particular
manufacturer, distributor, or advertiser, or (B) that it will
join with other such establishments in the same industry for
the purpose of collective purchasing, or (C) that it will have
the exclusive rights to sell the goods or use the brand name of
a manufacturer, distributor, or advertiser within a specified
area, or by reason of the fact that it occupies premises leased
to it by a person who also leases premises to other retail or
service establishments.
(2) For purposes of paragraph (1), the activities performed
by any person or persons--
(A) in connection with the operation of a hospital,
an institution primarily engaged in the care of the
sick, the aged, the mentally ill or defective who
reside on the premises of such institution, a school
for mentally or physicially handicapped or gifted
children, a preschool, elementary or secondary school,
or an institution of higher education (regardless of
whether or not such hospital, institution, or school is
operated for profit or not for profit), or
(B) in connection with the operation of a street,
suburban or interurban electric railway, or local
trolley or motorbus carrier, if the rates and services
of such railway or carrier are subject to regulation by
a State or local agency (regardless of whether or not
such railway or carrier is public or private or
operated for profit or not for profit), or
(C) in connection with the activities of a public
agency.
shall be deemed to be activities performed for a business
purpose.
(s)(1) ``Enterprise engaged in commerce or in the production
of goods for commerce'' means an enterprise that--
(A)(i) has employees engaged in commerce or in the
production of goods for commerce, or that has employees
handling, selling, or otherwise working on goods or
materials that have been moved in or produced for
commerce by any person; and
(ii) is an enterprise whose annual gross volume of
sales made or business done is not less than $500,000
(exclusive of excise taxes at the retail level that are
separately stated);
(B) is engaged in the operation of a hospital, an
institution primarily engaged in the care of the sick,
the aged, or the mentally ill or defective who reside
on the premises of such institution, a school for
mentally or physically handicapped or gifted children,
a preschool, elementary or secondary school, or an
institution of higher education (regardless of whether
or not such hospital, institution, or school is public
or private or operated for profit or not for profit);
or
(C) is an activity of a public agency.
(2) Any establishment that has as its only regular employees
the owner thereof or the parent, spouse, child, or other member
of the immediate family of such owner shall not be considered
to be an enterprise engaged in commerce or in the production of
goods for commerce or a part of such an enterprise. The sales
of such an establishment shall not be included for the purpose
of determining the annual gross volume of sales of any
enterprise for the purpose of this subsection.
(t) ``Tipped employee'' means any employee engaged in an
occupation in which he customarily and regularly receives more
than $30 a month in tips.
(u) ``Man-day'' means any day during which an employee
performs any agricultural labor for not less than one hour.
(v) ``Elementary school'' means a day or residential school
which provides elementary education, as determined under State
law.
(w) ``Secondary school'' means a day or residential school
which provides secondary education, as determined under State
law.
(x) ``Public agency'' means the Government of the United
States; the government of a State or political subdivision
thereof; any agency of the United States (including the United
States Postal Service and Postal Rate Commission), a State, or
a political subdivision of a State; or any interstate
governmental agency.
(y) ``Employee in fire protection activities'' means an
employee, including a firefighter, paramedic, emergency medical
technician, rescue worker, ambulance personnel, or hazardous
materials worker, who--
(1) is trained in fire suppression, has the legal
authority and responsibility to engage in fire
suppression, and is employed by a fire department of a
municipality, county, fire district, or State; and
(2) is engaged in the prevention, control, and
extinguishment of fires or response to emergency
situations where life, property, or the environment is
at risk.
* * * * * * *
minimum wages
Sec. 6. (a) Every employer shall pay to each of his employees
who in any workweek is engaged in commerce or in the production
of goods for commerce, or is employed in an enterprise engaged
in commerce or in the production of goods for commerce, wages
at the following rates:
[(1) except as otherwise provided in this section,
not less than--
[(A) $5.85 an hour, beginning on the 60th day
after the date of enactment of the Fair Minimum
Wage Act of 2007;
[(B) $6.55 an hour, beginning 12 months after
that 60th day; and
[(C) $7.25 an hour, beginning 24 months after
that 60th day;]
(1) except as otherwise provided in this section, not
less than--
(A) $8.55 an hour, beginning on the effective
date under section 7 of the Raise the Wage Act;
(B) $9.85 an hour, beginning 1 year after
such effective date;
(C) $11.15 an hour, beginning 2 years after
such effective date;
(D) $12.45 an hour, beginning 3 years after
such effective date;
(E) $13.75 an hour, beginning 4 years after
such effective date;
(F) $15.00 an hour, beginning 5 years after
such effective date; and
(G) beginning on the date that is 6 years
after such effective date, and annually
thereafter, the amount determined by the
Secretary under subsection (h);
(2) if such employee is a home worker in Puerto Rico
or the Virgin Islands, not less than the minimum piece
rate prescribed by regulation or order; or, if no such
minimum piece rate is in effect, any piece rate adopted
by such employer which shall yield, to the proportion
or class of employees prescribed by regulation or
order, not less than the applicable minimum hourly wage
rate. Such minimum piece rates or employer piece rates
shall be commensurate with, and shall be paid in lieu
of, the minimum hourly wage rate applicable under the
provisions of this section. The Secretary of Labor, or
his authorized representative, shall have power to make
such regulations or orders as are necessary or
appropriate to carry out any of the provisions of this
paragraph, including the power without limiting the
generality of the foregoing, to define any operation or
occupation which is performed by such home work
employees in Puerto Rico or the Virgin Islands; to
establish minimum piece rates for any operation or
occupation so defined; to prescribe the method and
procedure for ascertaining and promulgating minimum
piece rates; to prescribe standards for employer piece
rates, including the proportion or class of employees
who shall receive not less than the minimum hourly wage
rate; to define the term ``home worker''; and to
prescribe the conditions under which employers, agents,
contractors, and subcontractors shall cause goods to be
produced by home workers;
(3) if such employee is employed as a seaman on an
American vessel, not less than the rate which will
provide to the employee, for the period covered by the
wage payment, wages equal to compensation at the hourly
rate prescribed by paragraph (1) of this subsection for
all hours during such period when he was actually on
duty (including periods aboard ship when the employee
was on watch or was, at the direction of a superior
officer, performing work or standing by, but not
including off-duty periods which are provided pursuant
to the employment agreement); or
(4) if such employee is employed in agriculture, not
less than the minimum wage rate in effect under
paragraph (1) after December 31, 1977.
(b) Every employer shall pay to each of his employees (other
than an employee to whom subsection (a)(5) applies) who in any
workweek is engaged in commerce or in the production of goods
for commerce, or is employed in an enterprise engaged in
commerce or in the production of goods for commerce, and who in
such workweek is brought within the purview of this section by
the amendments made to this Act by the Fair Labor Standards
Amendments of 1966, title IX of the Education Amendments of
1972, or the Fair Labor Standards Amendments of 1974, wages at
the following rate: Effective after December 31, 1977, not less
than the minimum wage rate in effect under subsection (a)(1).
(d)(1) No employer having employees subject to any provisions
of this section shall discriminate, within any establishment in
which such employees are employed, between employees on the
basis of sex by paying wages to employees in such establishment
at a rate less than the rate at which he pays wages to
employees of the opposite sex in such establishment for equal
work on jobs the performance of which requires equal skill,
effort, and responsibility, and which are performed under
similar working conditions, except where such payment is made
pursuant to (i) a seniority system; (ii) a merit system; (iii)
a system which measures earnings by quantity or quality or
production; or (iv) a differential based on any other factor
other than sex: Provided, That an employer who is paying a wage
rate differential in violation of this subsection shall not, in
order to comply with the provisions of this subsection, reduce
the wage rate of any employee.
(2) No labor organization, or its agents, representing
employees of an employer having employees subject to any
provisions of this section shall cause or attempt to cause such
an employer to discriminate against an employee in violation of
paragraph (1) of this subsection.
(3) For purposes of administration and enforcement, any
amounts owing to any employees which have been withheld in
violation of this subsection shall be deemed to be unpaid
minimum wages or unpaid overtime-compensation under this Act.
(4) As used in this subsection, the term ``labor
organization'' means any organization of any kind, or any
agency or employee representation committee or plan, in which
employees participate and which exists for the purpose, in
whole or in part, of dealing with employers concerning
grievances, labor disputes, wages, rates of pay, hours of
employment, or conditions of work.
(e)(1) Notwithstanding the provisions of section 13 of this
Act (except subsections (a)(1) and (f) thereof), every employer
providing any contract services (other than linen supply
services) under a contract with the United States or any
subcontract thereunder shall pay to each of his employees whose
rate of pay is not governed by the Service Contract Act of 1965
(41 U.S.C. 351-357) or to whom subsection (a)(1) of this
section is not applicable, wages at rates not less than the
rates provided for in subsection (b) of this section.
(2) Notwithstanding the provisions of section 13 of this Act
(except subsections (a)(1) and (f) thereof) and the provisions
of the Service Contract Act of 1965, every employer in an
establishment providing linen supply services to the United
States under a contract with the United States or any
subcontract thereunder shall pay to each of his employees in
such establishment wages at rates not less than those
prescribed in subsection (b), except that if more than 50 per
centum of the gross annual dollar volume of sales made or
business done by such establishment is derived from providing
such linen supply services under any such contracts or
subcontracts, such employer shall pay to each of his employees
in such establishment wages at rates not less than those
prescribed in subsection (a)(1) of this section.
(f) Any employee--
(1) who in any workweek is employed in domestic
service in a household shall be paid wages at a rate
not less than the wage rate in effect under section
6(b) unless such employee's compensation for such
service would not because of section 209(a)(6) of the
Social Security Act constitute wages for the purpose of
title II of such Act, or
(2) who in any workweek--
(A) is employed in domestic service in one or
more households, and
(B) is so employed for more than 8 hours in
the aggregate,
shall be paid wages for such employment in such
workweek at a rate not less than the wage rate in
effect under section 6(b).
(g)(1) In lieu of the rate prescribed by subsection (a)(1),
any employer may pay any employee of such employer, during the
first 90 consecutive calendar days after such employee is
initially employed by such employer, [a wage which is not less
than $4.25 an hour.] a wage at a rate that is not less than--
(A) for the 1-year period beginning on the effective
date under section 7 of the Raise the Wage Act, $5.50
an hour;
(B) for each succeeding 1-year period until the
hourly wage under this paragraph equals the wage in
effect under section 6(a)(1) for such period, an hourly
wage equal to the amount determined under this
paragraph for the preceding year, increased by the
lesser of--
(i) $1.25; or
(ii) the amount necessary for the wage in
effect under this paragraph to equal the wage
in effect under section 6(a)(1) for such
period, rounded up to the nearest multiple of
$0.05; and
(C) for each succeeding 1-year period after the
increase made pursuant to subparagraph (B)(ii), the
minimum wage in effect under section 6(a)(1).
(2) In lieu of the rate prescribed by subsection (a)(1), the
Governor of Puerto Rico, subject to the approval of the
Financial Oversight and Management Board established pursuant
to section 101 of the Puerto Rico Oversight, Management, and
Economic Stability Act, may designate a time period not to
exceed four years during which employers in Puerto Rico may pay
employees who are initially employed after the date of
enactment of such Act a wage which is not less than the wage
described in paragraph (1). Notwithstanding the time period
designated, such wage shall not continue in effect after such
Board terminates in accordance with section 209 of such Act.
(3) No employer may take any action to displace employees
(including partial displacements such as reduction in hours,
wages, or employment benefits) for purposes of hiring
individuals at the wage authorized in paragraph (1) or (2).
(4) Any employer who violates this subsection shall be
considered to have violated section 15(a)(3) (29 U.S.C.
215(a)(3)).
(5) This subsection shall only apply to an employee who has
not attained the age of 20 years, except in the case of the
wage applicable in Puerto Rico, 25 years, until such time as
the Board described in paragraph (2) terminates in accordance
with section 209 of the Act described in such paragraph.
[Section 4(a) of H.R. 582 (as reported) provides for an
amendment to section 6(g)(1) of the Fair Labor Standards Act of
1938, which is shown above. Subsection (b)(1) of section 4 of
H.R. 582 (as reported) also provides for an amendment to repeal
subsection (g) of section 6 (as amended by subsection (a) of
such section 4). Paragraph (3) of section 4(b) of H.R. 582 (as
reported) provides: ``The repeal and amendment made by
paragraphs (1) and (2), respectively, shall take effect on the
date that is one day after the date on which the hourly wage
under subparagraph (C) of section 6(g)(1) of the Fair Labor
Standards Act of 1938 (29 U.S.C. 206(g)(1)), as amended by
subsection (a), takes effect.''. The following version of
subsection (g) reflects the amendments made to it by
subsections (a) and (b)(1) of section 4 of H.R. 582.]
[(g)(1) In lieu of the rate prescribed by subsection (a)(1),
any employer may pay any employee of such employer, during the
first 90 consecutive calendar days after such employee is
initially employed by such employer, a wage at a rate that is
not less than--
[(A) for the 1-year period beginning on the effective
date under section 7 of the Raise the Wage Act, $5.50
an hour;
[(B) for each succeeding 1-year period until the
hourly wage under this paragraph equals the wage in
effect under section 6(a)(1) for such period, an hourly
wage equal to the amount determined under this
paragraph for the preceding year, increased by the
lesser of--
[(i) $1.25; or
[(ii) the amount necessary for the wage in
effect under this paragraph to equal the wage
in effect under section 6(a)(1) for such
period, rounded up to the nearest multiple of
$0.05; and
[(C) for each succeeding 1-year period after the
increase made pursuant to subparagraph (B)(ii), the
minimum wage in effect under section 6(a)(1).
[(2) In lieu of the rate prescribed by subsection (a)(1), the
Governor of Puerto Rico, subject to the approval of the
Financial Oversight and Management Board established pursuant
to section 101 of the Puerto Rico Oversight, Management, and
Economic Stability Act, may designate a time period not to
exceed four years during which employers in Puerto Rico may pay
employees who are initially employed after the date of
enactment of such Act a wage which is not less than the wage
described in paragraph (1). Notwithstanding the time period
designated, such wage shall not continue in effect after such
Board terminates in accordance with section 209 of such Act.
[(3) No employer may take any action to displace employees
(including partial displacements such as reduction in hours,
wages, or employment benefits) for purposes of hiring
individuals at the wage authorized in paragraph (1) or (2).
[(4) Any employer who violates this subsection shall be
considered to have violated section 15(a)(3) (29 U.S.C.
215(a)(3)).
[(5) This subsection shall only apply to an employee who has
not attained the age of 20 years, except in the case of the
wage applicable in Puerto Rico, 25 years, until such time as
the Board described in paragraph (2) terminates in accordance
with section 209 of the Act described in such paragraph.]
(h)(1) Not later than each date that is 90 days before a new
minimum wage determined under subsection (a)(1)(G) is to take
effect, the Secretary shall determine the minimum wage to be in
effect under this subsection for each period described in
subsection (a)(1)(G). The wage determined under this subsection
for a year shall be--
(A) not less than the amount in effect under
subsection (a)(1) on the date of such determination;
(B) increased from such amount by the annual
percentage increase, if any, in the median hourly wage
of all employees as determined by the Bureau of Labor
Statistics; and
(C) rounded up to the nearest multiple of $0.05.
(2) In calculating the annual percentage increase in the
median hourly wage of all employees for purposes of paragraph
(1)(B), the Secretary, through the Bureau of Labor Statistics,
shall compile data on the hourly wages of all employees to
determine such a median hourly wage and compare such median
hourly wage for the most recent year for which data are
available with the median hourly wage determined for the
preceding year.
(i) Not later than 60 days prior to the effective date of any
increase in the required wage determined under subsection
(a)(1) or subparagraph (B) or (C) of subsection (g)(1), or in
accordance with subclause (II) or (III) of section
3(m)(2)(A)(i) or section 14(c)(1)(A), the Secretary shall
publish in the Federal Register and on the website of the
Department of Labor a notice announcing each increase in such
required wage.
[Section 5 of H.R. 582 (as reported) provides for an amendment
to add a new subsection (i) at the end of section 6 of the Fair
Labor Standards Act of 1938, which is shown above. Sections
3(c)(2), 4(b)(2), and 6(b)(1) of H.R. 582 (as reported) also
provide for amendments to section 6(i). For the delayed
effective dates to these amendments, see sections 3(c)(3),
4(b)(3), and 6(b)(2) of H.R. 582 (as reported). The following
version of subsection (i) reflects all amendments by sections
3(c)(2), 4(b)(2), 5, and 6(b)(1) of H.R. 582.]
(i) Not later than 60 days prior to the effective date of any
increase in the required wage determined under subsection
(a)(1) [or subparagraph (B) or (C) of subsection (g)(1), or in
accordance with subclause (II) or (III) of section
3(m)(2)(A)(i) or section 14(c)(1)(A),] the Secretary shall
publish in the Federal Register and on the website of the
Department of Labor a notice announcing each increase in such
required wage.
* * * * * * *
learners, apprentices, students, and handicapped workers
Sec. 14. (a) The Secretary, to the extent necessary in order
to prevent curtailment of opportunities for employment, shall
by regulations or by orders provide for the employment of
learners, of apprentices, and messengers employed primarily in
delivering letters and messages, under special certificates
issued pursuant to regulations of the Secretary, at such wages
lower than the minimum wage applicable under section 6 and
subject to such limitations as to time, number, proportion, and
length of service as the Secretary shall prescribe.
(b)(1)(A) The Secretary, to the extent necessary in order to
prevent curtailment of opportunities for employment, shall by
special certificate issued under a regulation or order provide,
in accordance with subparagraph (B), for the employment, at a
wage rate not less than 85 per centum of the otherwise
applicable wage rate in effect under section 6 or not less than
$1.60 an hour, whichever is the higher, of full-time students
(regardless of age but in compliance with applicable child
labor laws) in retail or service establishments.
(B) Except as provided in paragraph (4)(B), during any month
in which full-time students are to be employed in any retail or
service establishment under certificates issued under this
subsection the proportion of student hours of employment to the
total hours of employment of all employees in such
establishment may not exceed--
(i) in the case of a retail or service establishment
whose employees (other than employees engaged in
commerce or in the production of goods for commerce)
were covered by this Act before the effective date of
the Fair Labor Standards Amendments of 1974--
(I) the proportion of student hours of
employment to the total hours of employment of
all employees in such establishment for the
corresponding month of the immediately
preceding twelve-month period,
(II) the maximum proportion for any
corresponding month of student hours of
employment to the total hours of employment of
all employees in such establishment applicable
to the issuance of certificates under this
section at any time before the effective date
of the Fair Labor Standards Amendments of 1974
for the employment of students by such
employer, or
(III) a proportion equal to one-tenth of the
total hours of employment of all employees in
such establishment,
whichever is greater;
(ii) in the case of retail or service establishment
whose employees (other than employees engaged in
commerce or in the production of goods for commerce)
are covered for the first time on or after the
effective date of the Fair Labor Standards Amendments
of 1974--
(I) the proportion of hours of employment of
students in such establishment to the total
hours of employment of all employees in such
establishment for the corresponding month of
the twelve-month period immediately prior to
the effective date of such Amendments,
(II) the proportion of student hours of
employment to the total hours of employment of
all employees in such establishment for the
corresponding month of immediately preceding
twelve-month period, or
(III) a proportion equal to one-tenth of the
total hours of employment of all employees in
such establishment,
whichever is greater; or
(iii) in the case of a retail or service
establishment for which records of student hours worked
are not available, the proportion of students hours of
employment to the total hours of employment of all
employees based on the practice during the immediately
preceding twelve-month period in (I) similar
establishments of the same employer in the same general
metropolitan area in which such establishment is
located, (II) similar establishments of the same or
nearby communities if such establishment is not in a
metropolitan area, or (III) other establishments of the
same general character operating in the community or
the nearest comparable community.
For purpose of clauses (i), (ii), and (iii) of this
subparagraph, the term ``student hours of employment'' means
hours during which students are employed in a retail or service
establishment under certificates issued under this subsection.
(2) The Secretary, to the extent necessary in order to
prevent curtailment of opportunities for employment, shall by
special certificate issued under a regulation or order provide
for the employment, at a wage rate not less than 85 per centum
of the wage rate in effect under section 6(a)(5) or not less
than $1.30 an hour, whichever is the higher, of full-time
students (regardless of age but in compliance with applicable
child labor laws) in any occupation in agriculture.
(3) The Secretary, to the extent necessary in order to
prevent curtailment of opportunities for employment, shall by
special certificate issued under a regulation or order provide
for the employment by an institution of higher education, at a
wage rate not less than 85 per centum of the otherwise
applicable wage rate in effect under section 6 or not less than
$1.60 an hour, whichever is the higher, of full-time students
(regardless of age but in compliance with applicable child
labor laws) who are enrolled in such institution. The Secretary
shall by regulation prescribe standards and requirements to
insure that this paragraph will not create a substantial
probability of reducing the full-time employment opportunities
of persons other than those to whom the minimum wage rate
authorized by this paragraph is applicable.
(4)(A) A special certificate issued under paragraph (1), (2),
or (3) shall provide that the student or students for whom it
is issued shall, except during vacation periods, be employed on
a part-time basis and not in excess of twenty hours in any
workweek.
(B) If the issuance of a special certificate under paragraph
(1) or (2) for an employer will cause the number of students
employed by such employer under special certificates issued
under this subsection to exceed six, the Secretary may not
issue such a special certificate for the employment of a
student by such employer unless the Secretary finds employment
of such student will not a create a substantial probability of
reducing the full-time employment opportunities of persons
other than those employed under special certificates issued
under this subsection. If the issuance of a special certificate
under paragraph (1) or (2) for an employer will not cause the
number of students employed by such employer under special
certificates issued under this subsection to exceed six--
(i) the Secretary may issue a special certificate
under paragraph (1) or (2) for the employment of a
student by such employer if such employer certifies to
the Secretary that the employment of such student will
not reduce the full-time employment opportunities of
persons other than those employed under special
certificates issued under this subsection, and
(ii) in the case of an employer which is a retail or
service establishment, subparagraph (B) of paragraph
(1) shall not apply with respect to the issuance of
special certificates for such employer under such
paragraph.
The requirement of this subparagraph shall not apply in the
case of the issuance of special certificates under paragraph
(3) for the employment of full-time students by institutions of
higher education; except that if the Secretary determines that
an institution of higher education is employing students under
certificates issued under paragraph (3) but in violation of the
requirements of that paragraph or of regulations issued
thereunder, the requirements of this subparagraph shall apply
with respect to the issuance of special certificates under
paragraph (3) for the employment of students by such
institution.
(C) No special certificate may be issued under this
subsection unless the employer for whom the certificate is to
be issued provides evidence satisfactory to the Secretary of
the student status of the employees to be employed under such
special certificate.
(D) To minimize paperwork for, and to encourage, small
businesses to employ students under special certificates issued
under paragraphs (1) and (2), the Secretary shall, by
regulation or order, prescribe a simplified application form to
be used by employers in applying for such a certificate for the
employment of not more than six full-time students. Such an
application shall require only--
(i) a listing of the name, address, and business of
the applicant employer,
(ii) a listing of the date the applicant began
business, and
(iii) the certification that the employment of such
full-time students will not reduce the full-time
employment opportunities of persons other than persons
employed under special certificates.
(c)(1) The Secretary, to the extent necessary to prevent
curtailment of opportunities for employment, shall by
regulation or order provide for the employment, under special
certificates, of individuals (including individuals employed in
agriculture) whose earning or productive capacity is impaired
by age, physical or mental deficiency, or injury, at wages
which are--
[(A) lower than the minimum wage applicable under
section 6,]
(A) at a rate that equals, or exceeds, for each year,
the greater of--
(i)(I) $4.25 an hour, beginning 1 year after
the date the wage rate specified in section
6(a)(1)(A) takes effect;
(II) $6.40 an hour, beginning 2 years after
such date;
(III) $8.55 an hour, beginning 3 years after
such date;
(IV) $10.70 an hour, beginning 4 years after
such date;
(V) $12.85 an hour, beginning 5 years after
such date; and
(VI) the wage rate in effect under section
6(a)(1), on the date that is 6 years after the
date the wage specified in section 6(a)(1)(A)
takes effect; or
(ii) if applicable, the wage rate in effect
on the day before the date of enactment of the
Raise the Wage Act for the employment, under a
special certificate issued under this
paragraph, of the individual for whom the wage
rate is being determined under this
subparagraph,
(B) commensurate with those paid to nonhandicapped
workers, employed in the vicinity in which the
individuals under the certificates are employed, for
essentially the same type, quality, and quantity of
work, and
(C) related to the individual's productivity.
(2) The Secretary shall not issue a certificate under
paragraph (1) unless the employer provides written assurances
to the Secretary that--
(A) in the case of individuals paid on an hourly rate
basis, wages paid in accordance with paragraph (1) will
be reviewed by the employer at periodic intervals at
least once every 6 months, and
(B) wages paid in accordance with paragraph (1) will
be adjusted by the employer at periodic intervals, at
least once each year, to reflect changes in the
prevailing wage paid to experienced nonhandicapped
individuals employed in the locality for essentially
the same type of work.
(3) Notwithstanding paragraph (1), no employer shall be
permitted to reduce the hourly wage rate prescribed by
certificate under this subsection in effect on June 1, 1986, of
any handicapped individual for a period of two years from such
date without prior authorization of the Secretary.
(4) Nothing in this subsection shall be construed to prohibit
an employer from maintaining or establishing work activities
centers to provide therapeutic activities for handicapped
clients.
(5)(A) Notwithstanding any other provision of this
subsection, any employee receiving a special minimum wage at a
rate specified pursuant to this subsection or the parent or
guardian of such an employee may petition the Secretary to
obtain a review of such special minimum wage rate. An employee
or the employee's parent or guardian may file such a petition
for and in behalf of the employee or in behalf of the employee
and other employees similarly situated. No employee may be a
party to any such action unless the employee or the employee's
parent or guardian gives consent in writing to become such a
party and such consent is filed with the Secretary.
(B) Upon receipt of a petition filed in accordance with
subparagraph (A), the Secretary within 10 days shall assign the
petition to an administrative law judge appointed pursuant to
section 3105 of title 5, United States Code. The administrative
law judge shall conduct a hearing on the record in accordance
with section 554 of title 5, United States Code, with respect
to such petition within 30 days after assignment.
(C) In any such proceeding, the employer shall have the
burden of demonstrating that the special minimum wage rate is
justified as necessary in order to prevent curtailment of
opportunities for employment.
(D) In determining whether any special minimum wage rate is
justified pursuant to subparagraph (C), the administrative law
judge shall consider--
(i) the productivity of the employee or employees
identified in the petition and the conditions under
which such productivity was measured; and
(ii) the productivity of other employees performing
work of essentially the same type and quality for other
employers in the same vicinity.
(E) The administrative law judge shall issue a decision
within 30 days after the hearing provided for in subparagraph
(B). Such action shall be deemed to be a final agency action
unless within 30 days the Secretary grants a request to review
the decision of the administrative law judge. Either the
petitioner or the employer may request review by the Secretary
within 15 days of the date of issuance of the decision by the
administrative law judge.
(F) The Secretary, within 30 days after receiving a request
for review, shall review the record and either adopt the
decision of the administrative law judge or issue exceptions.
The decision of the administrative law judge, together with any
exceptions, shall be deemed to be a final agency action.
(G) A final agency action shall be subject to judicial review
pursuant to chapter 7 of title 5, United States Code. An action
seeking such review shall be brought within 30 days of a final
agency action described in subparagraph (F).
(6) Prohibition on new special certificates.--
Notwithstanding paragraph (1), the Secretary shall not
issue a special certificate under this subsection to an
employer that was not issued a special certificate
under this subsection before the date of enactment of
the Raise the Wage Act.
(7) Sunset.--Beginning on the day after the date on
which the wage rate described in paragraph
(1)(A)(i)(VI) takes effect, the authority to issue
special certificates under paragraph (1) shall expire,
and no special certificates issued under paragraph (1)
shall have any legal effect.
(8) Transition assistance.--Upon request, the
Secretary shall provide--
(A) technical assistance and information to
employers issued a special certificate under
this subsection for the purposes of--
(i) transitioning the practices of
such employers to comply with this
subsection, as amended by the Raise the
Wage Act; and
(ii) ensuring continuing employment
opportunities for individuals with
disabilities receiving a special
minimum wage rate under this
subsection; and
(B) information to individuals employed at a
special minimum wage rate under this
subsection, which may include referrals to
Federal or State entities with expertise in
competitive integrated employment.
(d) The Secretary may by regulation or order provide that
sections 6 and 7 shall not apply with respect to the employment
by any elementary or secondary school of its students if such
employment constitutes as determined under regulations
prescribed by the Secretary, an integral part of the regular
education program provided by such school and such employment
is in accordance with applicable child labor laws.
* * * * * * *
MINORITY VIEWS
Introduction
In recent years, the far-left has begun to call for
socialist policies like free college and universal health care
and now Committee Democrats are jumping on board by considering
H.R. 582, legislation to hike the federal minimum wage from
$7.25 to $15 an hour. Instead of providing tangible benefits to
working class Americans, a bill to increase the federal minimum
wage by 107 percent would cause the most harm to the very
people its supporters claim to benefit. Studies cited below,
including from the Congressional Budget Office (CBO), show
significant job losses resulting from such an increase. Lesser-
skilled workers in entry-level jobs, Americans without a GED,
and tipped employees would bear the brunt of job losses caused
by the mandate. Committee Republicans know that instead of
reducing poverty, a radical, one-size-fits-all minimum wage
hike would redistribute poverty.
Such a radical minimum wage hike would not happen in a
vacuum and would have a number of severely negative
consequences. Mandating a $15 federal minimum wage would harm
students, as it would have a negative impact on youth
employment as most workers paid the minimum wage are below the
age of 25. These are individuals at the start of their careers
or filling part-time or summer jobs, and raising the minimum
wage to $15 an hour puts these types of jobs at risk of being
eliminated altogether.
More than doubling the current federal minimum wage would
harm businesses, especially small and local businesses, and the
economy. This kind of unprecedented, one-size-fits-all mandate
would force many job creators to reduce workers' hours, let
employees go, or close their doors for good. The development
would also lead to accelerated workplace automation, something
that many Democrats oppose.
Currently, wages are on the rise thanks to a booming
economy, the Republican Tax Cuts and Jobs Act, and elimination
of unnecessary regulations. With more than 7 million unfilled
jobs nationwide, job creators know they must offer competitive
wages and benefits to attract and retain workers. Congress
should be cautious when considering a policy that would
interfere with this positive momentum for workers. For these
reasons, and as set forth more fully below, Committee
Republicans are united in their opposition to H.R. 582.
Negative Consequences of H.R. 582
Committee Republicans are justifiably concerned about many
severely negative consequences of the bill for workers,
students, small businesses, and the economy, including the
following:
H.R. 582 IMPOSES A RADICAL AND UNPRECEDENTED MINIMUM WAGE HIKE
Imposing a 107 percent increase in the federal minimum wage
to $15 would be a historically radical and unprecedented
mandate. The last increase in the federal minimum wage was 41
percent, but prior increases were ``typically lower.''\1\ In
the federal minimum wage's history, it has been an average of
$7.40 in today's dollars, slightly above the current wage rate
of $7.25 per hour.\2\ If the minimum wage had been indexed to
inflation in 2010, it would have been $8.35 in 2018, based on
the Bureau of Labor Statistics' consumer price index. According
to CBO, the federal minimum wage reached its peak in 1968, when
its value in 2013 dollars was $8.41 if the conversion is done
with the price index for personal consumption expenditures
published by the U.S. Bureau of Economic Analysis, which is the
index CBO favors.\3\
---------------------------------------------------------------------------
\1\CBO, The Effects of a Minimum-Wage Increase on Employment and
Family Income 23 n.8 (Feb. 2014).
\2\Empl. Policies Inst., The Impact of a $15 Minimum Wage 2 (Jan.
2019), https://www.epionline.org/wp-content/uploads/2019/01/
EPI_NationalMWDocument.pdf.
\3\CBO, supra note 1, at 4 n.6.
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Dr. Douglas Holtz-Eakin, former director of CBO, described
in his testimony the magnitude of the minimum wage hike
proposed in H.R. 582:
The federal government has never implemented a
minimum wage hike of this magnitude and only a few
cities are beginning to implement $15 per hour minimum
wages. It cannot be understated, however, that a
minimum wage increase this large (over 100 percent)
poses a major disruption to the U.S. labor market.
Unfortunately, the low-wage workers the policy is
intended to help would be the very ones who would most
suffer these consequences.\4\
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\4\Gradually Raising the Minimum Wage to $15: Good for Workers,
Good for Businesses, and Good for the Economy: Hearing Before the H.
Comm. on Educ. and Labor, 116th Cong. (2019) (statement of Douglas
Holtz-Eakin, President, American Action Forum, at 4).
Dr. Michael R. Strain, Director of Economic Policy Studies
at the American Enterprise Institute, stated in his testimony
that a 107 percent increase to the federal minimum wage would
---------------------------------------------------------------------------
be an unprecedented change in policy:
A $15 minimum wage is outside both the national and
international evidence base. . . . A $15 per hour
federal minimum wage is a large and risky gamble, and
is outside our evidence base, because it is such a high
minimum wage relative to the existing distribution of
wage rates. . . . [A] $15 per hour federal minimum wage
is not a modest policy change. It is a very large
policy change. It will impact a very large share of the
labor market. Such a large increase in the minimum wage
would send labor market policy into uncharted waters,
and would risk harming the very groups of workers and
individuals the policy is designed to help.\5\
---------------------------------------------------------------------------
\5\Id. (statement of Michael R. Strain, Ph.D., Director of Economic
Policy Studies, American Enterprise Institute, at 4-5).
A survey of 197 U.S. economists conducted in February 2019
found that 84 percent believe a $15 federal minimum wage would
have negative effects on youth employment, and 77 percent
believe it would have a negative impact on jobs available.\6\
Even President Obama's former Chairman of Economic Advisers
argued in October 2015 that raising the minimum wage to $15
would ``put us in uncharted waters, and risk undesirable and
unintended consequences.''\7\
---------------------------------------------------------------------------
\6\Lloyd Corder, Corcom, Inc., Carnegie Mellon Univ., Survey of US
Economists on a $15 Federal Minimum Wage 4 (Mar. 2019), https://
www.epionline.org/wp-content/uploads/2019/03/EPI_Feb2019_MinWageSurvey-
FINAL.pdf.
\7\Alan B. Krueger, The Minimum Wage: How Much Is Too Much?, N.Y.
TIMES, Oct. 9, 2015.
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H.R. 582 WOULD CAUSE EXTENSIVE JOB LOSSES
Raising the federal minimum wage to $15 would cause
extensive and disruptive job losses and harm entry-level
workers in many regions around the country. In a comprehensive
report issued in July 2019, CBO estimates that up to 3.7
million jobs would be lost from a minimum wage increase to $15,
with a median impact of 1.3 million workers becoming jobless
because of the wage hike.\8\ Even under the estimated median
impact, 7 percent of workers directly affected by the minimum
wage hike would lose their jobs.\9\ Significantly, of those
losing their jobs, 60 percent would be female workers, 46
percent would be young workers, and 38 percent would have less
than a high school diploma.\10\
---------------------------------------------------------------------------
\8\CBO, The Effects on Employment and Family Income of Increasing
the Federal Minimum Wage (July 2019).
\9\Id. at 12.
\10\Id. at 14.
---------------------------------------------------------------------------
CBO also estimates that a $15 federal minimum wage would
lift 1.3 million individuals out of poverty.\11\ Therefore,
H.R. 582 would cause at least one job to be lost for every
person who moved out of poverty, and in the worst-case scenario
estimated by CBO, as many as three jobs would be lost for every
individual moving out of poverty. As such, H.R. 582 creates a
very ill-advised and undesirable trade off.
---------------------------------------------------------------------------
\11\Id. at 3.
---------------------------------------------------------------------------
In addition, CBO found that there would be a net reduction
in family income of $9 billion resulting from a $15 minimum
wage--in other words, the so-called raise mandated by H.R. 582
will reduce pay for many American families.\12\ Overall, the
recent CBO study demonstrates that the unprecedented, one-size-
fits-all wage hike dictated in H.R. 582 would hurt workers and
small businesses, and force many job creators to cope by
reducing workers' hours, eliminating workers' jobs, increasing
automation, or closing their doors for good.
---------------------------------------------------------------------------
\12\Id. at 2.
---------------------------------------------------------------------------
Furthermore, Dr. Holtz-Eakin, using the methodology from
CBO's 2014 minimum wage report,\13\ estimated that increasing
the federal minimum wage to $15 by 2024 would result in a loss
of 9.6 million jobs, nearly as much as the 10.2 million jobs
added to the U.S. economy since the end of 2014.\14\ Dr.
Strain's testimony agreed regarding the negative effects on
employment: ``I expect that raising the federal minimum wage to
$15 per hour would significantly reduce employment among lower-
skilled workers and less-experienced workers.''\15\
---------------------------------------------------------------------------
\13\See CBO, supra note 1.
\14\Holtz-Eakin, supra note 4, at 4.
\15\Strain, supra note 5, at 4.
---------------------------------------------------------------------------
H.R. 582 WOULD HARM ENTRY-LEVEL WORKERS AND STUDENTS
Minimum wage workers tend to be young. In 2017, while
workers under 25 were only about one-fifth of all hourly paid
workers, they were about half of those paid the minimum wage or
less. While workers 21 and under were only 11.1 percent of all
hourly workers, 36 percent were paid the minimum wage or
less.\16\ However, entry-level workers do not continue earning
the minimum wage for long. Approximately two-thirds of minimum
wage workers who remain in the workforce receive a raise within
one year.\17\ Dr. Strain noted in his testimony the importance
of the first job for younger workers as they move up the
economic ladder: ``Young workers need to get their start in the
labor market, using their first jobs to learn and gain valuable
experience.''\18\
---------------------------------------------------------------------------
\16\U.S. Dep't of Lab., Bureau of Lab. Stat., Characteristics of
Minimum Wage Workers, 2017 (Mar. 2018).
\17\Empl. Policies Inst., supra note 2, at 3.
\18\Strain, supra note 5, at 7.
---------------------------------------------------------------------------
As mentioned above, a survey of 197 economists found that
84 percent believe raising the federal minimum wage to $15 will
harm youth employment. Dr. Holtz-Eakin's testimony referred to
a comprehensive review of 100 minimum wage studies, which found
that two-thirds of the studies ``indicate that increasing the
minimum wage negatively effects employment, especially among
low-skill workers.'' Later research shows that minimum wage
increases ``harm low-income workers in a variety of other ways,
such as job loss, slowdown in hiring, increasing prices, firms
replacing low-skilled workers with more productive workers, and
firms shutting down all together.'' For example, Jeffrey
Clemens and Michael Wither found in 2014 that the last time
Congress increased the minimum wage, job losses among workers
earning less than $7.50 were ``so severe that their earnings,
on net, declined. . . . [E]mployment in this group fell by 8
percent, translating to about 1.7 million jobs.'' Further,
``net average monthly incomes for low-wage workers [fell] by
$100 during the first year after the minimum wage increase and
by an additional $50 in the following two years.''\19\
---------------------------------------------------------------------------
\19\Holtz-Eakin, supra note 4, at 4, 7.
---------------------------------------------------------------------------
Seattle's experience with a $15 minimum wage has confirmed
that it will hurt lower-wage workers, as Dr. Holtz-Eakin
explained:
[I]ndependent research on Seattle's $15 per hour
minimum wage demonstrates that the new law has been
destructive for the city's low-wage workers. University
of Washington (UW) researchers--hired by the Seattle
City Council to analyze the new law--found that the
minimum wage increase caused 6.8 percent of low-wage
workers to lose their jobs, meaning that 10,000 workers
in Seattle have lost their jobs. . . . Evidence also
indicates that in addition to costing 10,000 low-wage
workers their jobs, Seattle's $15 per hour minimum wage
caused work hours among low-wage workers to fall by so
much that their monthly earnings declined. In
particular, the 2017 UW study concluded that Seattle's
minimum wage increase boosted the average wage rate
among low-wage workers by just 3.1 percent or $0.44 per
hour. Unfortunately, this modest wage increase was
entirely offset by declines in work hours. The UW
researchers find that Seattle's minimum wage law has
caused low-wage work hours to decline by 9.4 percent.
Consequently, even among the low-wage workers who are
still employed and earn slightly higher wages, their
average monthly earnings, on net, declined by $125 per
month because they lost so many work hours. When
combining the lost work hours with the 10,000 lost
jobs, the 2017 UW study concluded that Seattle's $15
minimum wage law reduced total income paid to the
city's low-wage workers by $120 million per year.\20\
---------------------------------------------------------------------------
\20\Id. at 6.
In addition, a $15 minimum wage can cause harm beyond job
losses and reduced hours. A minimum wage increase can also
reduce employer-provided benefits such as health insurance. A
recent study found that state-level minimum wage increases
decreased the likelihood of individuals reporting having
employer-sponsored health insurance, with the largest effects
among very low-paying occupations.\21\ Dr. Strain commented on
---------------------------------------------------------------------------
additional negative consequences of a $15 minimum wage:
\21\Jeffrey Clemens et al., The Minimum Wage, Fringe Benefits, and
Worker Welfare, Nat'l Bureau Of Econ. Research, Working Paper 24635
(May 2018).
A minimum wage increase of this magnitude is also
imprudent because of the likelihood that such a large
increase will create unintended consequences. . . . In
my own research, my coauthors and I have found that
minimum wage increases are associated with decreases in
self-reported health outcomes among men, particularly
among unemployed men.\22\
---------------------------------------------------------------------------
\22\Strain, supra note 5, at 5-6.
---------------------------------------------------------------------------
H.R. 582 WOULD HURT TIPPED WORKERS
Under the Fair Labor Standards Act (FLSA), tipped workers
must be paid at least the federal minimum wage. However, the
FLSA permits a business owner to utilize a tip credit toward
its minimum wage obligation.\23\ If cash wages and tips do not
meet the federal minimum wage, the business owner must make up
the difference.
---------------------------------------------------------------------------
\23\29 U.S.C. 203(m)(2); 29 C.F.R. 531.59. Tipped employees are
those who customarily receive more than $30 per month in tips. 29
U.S.C. 203(t).
---------------------------------------------------------------------------
Most tipped employees do not support eliminating the tip
credit. They report earning over $14 per hour on average, with
top earners receiving $24 or more.\24\ A survey of hundreds of
restaurant employees found that 97 percent preferred the
current system of a base wage and tips to a no-tip system.\25\
Moreover, Harvard Business School economists found a 14 percent
increase in restaurant closures with each one-dollar increase
in the base wage for tipped employees in the San Francisco Bay
area.\26\ Dr. Holtz-Eakin discussed in his testimony how
eliminating the tip credit, as some cities have done, could
hurt employment:
---------------------------------------------------------------------------
\24\Empl. Policies Inst., supra note 2, at 3.
\25\Id.
\26\Id.
Likely worsening the effect on job growth, a number
of these cities boosted the ``tipped'' minimum wage by
eliminating the tip credit. While intended to boost pay
for tipped workers, eliminating the tip credit does not
make the most vulnerable better off. . . . For the
lowest earning tipped workers, eliminating the tip
credit makes little difference in their take-home pay.
Thus, removing the tip credit only places another
burden on restaurant businesses without improving the
livelihoods of low-income workers. This likely leads
businesses to further cut hours, jobs, or hiring.\27\
---------------------------------------------------------------------------
\27\Holtz-Eakin, supra note 4, at 6.
Ms. Simone Barron, a tipped worker in the full-service
restaurant industry in Seattle, testified about her experience
with a $15 minimum wage and no tip credit. She first noted in
---------------------------------------------------------------------------
her testimony the benefits of being a tipped worker:
Control over my earnings is one of the biggest perks
of working in the restaurant industry. The harder I
work to show hospitality to my guests, the better my
tip. That's an average of 20 percent I make on each
bill. The standard tipping model has a cost of living
increase built into its structure,--too as the cost of
goods goes up, so do menu prices and then so do tips.
Contrary to the rhetoric of my industry's critics, I'm
not ``forced'' to rely on tips-I've been able to thrive
on tips. Historically, in short four to six hour
shifts, I can earn $25 to $50 an hour--enough to make a
life for myself and my son.\28\
---------------------------------------------------------------------------
\28\Gradually Raising the Minimum Wage to $15: Good for Workers,
Good for Businesses, and Good for the Economy: Hearing Before the H.
Comm. on Educ. and Labor, 116th Cong. (2019) (statement of Simone
Barron at 1).
However, in response to a $15 minimum wage in Seattle and
no tip credit in the state of Washington, Ms. Barron's
restaurant changed to a service-charge model with no tip line
on the bill. As a result, Ms. Barron has seen a reduction in
her take-home pay: ``The few dollars an hour increase in my
minimum wage doesn't cover the loss of income because of not
receiving tips.''\29\ She has had to take a second job to
replace the lost income, her finances have become precarious,
---------------------------------------------------------------------------
and her quality of life has been diminished:
\29\Id. at 2.
---------------------------------------------------------------------------
I used to work 4 shifts a week and made enough money
to raise a son, pay my rent, go to school and be a part
of a vibrant arts community. With the cost of living
skyrocketing and the impact of the minimum wage
increase on my income, I had to get a second job and
work 6 days a week. I couldn't sustain that pace. Now,
I worry every month about paying my rent. This is a
worry I have never had until the minimum wage increase
impacted my job. I have had to give up my passion of
acting, I no longer can take trips with my kid in the
summers. My smaller income all goes to bills, all my
time goes to picking up just one more shift.\30\
---------------------------------------------------------------------------
\30\Id.
Ms. Barron's story shows the real-world damage H.R. 582
will have on individuals across the nation.
H.R. 582 WOULD THREATEN SMALL BUSINESSES AND THE ECONOMY
According to a January 2019 study done by the National
Federation of Independent Business (NFIB), enacting H.R. 582
would over a 10-year period reduce U.S. private sector
employment by over 1.6 million jobs and result in a cumulative
reduction in U.S. real output of over $2 trillion. Small
businesses would be particularly hurt. Businesses with fewer
than 500 employees would see 57 percent of private sector job
losses--over 900,000 lost jobs; businesses with fewer than 100
employees would see about 43 percent of all jobs lost--nearly
700,000 jobs.\31\
---------------------------------------------------------------------------
\31\MichaeL J. Chow and Paul S. Bettencourt, NFIB Research Ctr.,
Economic Effects of Enacting the Raise the Wage Act on Small Businesses
and the U.S. Economy 10 (Jan. 25, 2019).
---------------------------------------------------------------------------
Dr. Holtz-Eakin noted in his testimony that research has
shown minimum wage hikes result in ``a slowdown in hiring,
increasing prices, . . . and firms shutting down
altogether.'' As previously discussed, Dr. Holtz-Eakin
estimates a $15 federal minimum wage would result in a loss of
9.6 million jobs, which would nearly wipe out the 10.2 million
jobs the U.S. economy has added since the end of 2014.\32\
---------------------------------------------------------------------------
\32\Holtz-Eakin, supra note 4, at 4.
---------------------------------------------------------------------------
In a survey of small businesses, 47 percent said a two-year
phased-in $15 minimum wage would negatively impact their
business. Of those reporting a negative impact, 85 percent
anticipated they would have to increase the price of goods and
services, passing on some of those price increases to
consumers, and 74 percent said they would absorb wage increases
through lower earnings. Fifty-eight percent anticipated using
less expensive or part-time workers; 69 percent would not fill
an open position; 63 percent would reduce employee hours; and
62 percent would reduce the number of employees working at
their business.\33\
---------------------------------------------------------------------------
\33\NFIB Nat'l Small Business Poll, Job Openings 1 (2017), http://
411sbfacts.com/files/NFIB_SBP_JobOpenings2017B_final.pdf.
---------------------------------------------------------------------------
A recent survey of 173 restaurants representing more than
4,000 restaurant locations ranging from fine dining to fast
food found that 71 percent of operators responded to state and
local minimum wage hikes by raising menu prices. In addition,
64 percent said they responded by reducing employee hours, and
43 percent said they eliminated jobs.\34\
---------------------------------------------------------------------------
\34\Amelia Lucas, Higher minimum wage means restaurants raise
prices and fewer employee hours, survey finds, CNBC, Apr. 11, 2019. The
survey was conducted by Harri, a workplace management software company
that works with restaurants.
---------------------------------------------------------------------------
H.R. 582 IS NOT AN EFFECTIVE ANTI-POVERTY POLICY
The $15 minimum wage will not alleviate poverty. In 2014,
only 35 percent of individuals living in households with
incomes under the federal poverty line were employed at any
time during the previous year. Conversely, most people who
would be affected by a $15 minimum wage are not poor. The
average family income for affected individuals would be
$56,982. Nearly half--48.4 percent of those who would be
affected by a $15 minimum wage--live in households with incomes
over three times the federal poverty line.\35\
---------------------------------------------------------------------------
\35\Empl. Policies Inst., supra note 2, at 2.
---------------------------------------------------------------------------
Dr. Holtz-Eakin elaborated on why a $15 minimum wage will
not help those in poverty:
Evidence on the federal and local level indicates
that raising the minimum wage is an ineffective way to
assist low-income workers. Hourly wages do not
effectively identify economic well-being, as minimum
wage workers are from families across the income
distribution. While some minimum wage workers are in
poverty, the vast majority are not. For instance, 80
percent of those who make the federal minimum wage of
$7.25 per hour are not in poverty. Meanwhile, over one-
third of minimum wage workers are young adults who
still live with their parents. The incomes of those
families average more than $100,000. Thus, raising the
federal minimum wage to $15 per hour would result in
significant job loss in order to provide minimal
benefits to low-income workers. When examining the
effect of raising the federal minimum wage to $15 per
hour, the AAF-Manhattan Institute study found that only
6.7 percent of the net change in wage earnings would go
to workers in poverty, according to the middle
estimate. Twice as much, 14.7 percent, would go to
workers with family incomes over six-times the poverty
threshold. Consequently, at best, a $15 per hour
minimum wage will only marginally help low-income
workers.\36\
---------------------------------------------------------------------------
\36\Holtz-Eakin, supra note 4, at 6-7.
The previous points represent only a few of the predictable
and extremely negative consequences of enacting H.R. 582. As
noted in Dr. Strain's testimony, because a 107 percent increase
in the federal minimum wage is far outside the national and
international evidence base, the potential unintended
consequences of passing this legislation constitute a ``large
and risky gamble.'' It is irresponsible for Congressional
Democrats to foist a radical and unprecedented economic
experiment on workers, businesses, and the American economy,
and as such, H.R. 582 should be rejected.
Republican Amendments
H.R. 582 imposes a sudden and significant shift in labor
costs that will be felt by students, workers, businesses, and
the economy. During Committee consideration of H.R. 582,
Republicans offered amendments in an attempt to protect
Americans from the irresponsible policy espoused in this bill,
to no avail.
First, Representative Ben Cline (R-VA) focused on a key
priority of Committee Republicans--American job growth. With
our current growing economy and 7 million unfilled jobs
nationwide, wages are rising as job creators understand the
need to offer competitive wages and benefits in order to retain
and attract workers. But with studies showing that a 107
percent increase in the federal minimum wage will result in the
loss of 1.6 million jobs or even much more, it would be
egregiously irresponsible to enact this legislation without an
``off ramp'' to prevent the increase from phasing in if harmful
economic conditions arise. With this understanding, Mr. Cline
offered an amendment to ensure that the radical wage hikes
mandated by H.R. 582 will not continue if jobs are being lost,
an approach similar to provisions in state minimum wage laws,
including those in high-minimum wage states such as California
and New York. On a party line vote, this amendment was
defeated, with all Committee Democrats opposed.
Small businesses employ almost half of American workers and
account for two-thirds of net new jobs. In an effort to protect
those that drive local economies and are most vulnerable to a
radical increase in the federal minimum wage, Representative
Dan Meuser (R-PA) offered an amendment to shield the smallest
of businesses from the sudden and extreme spike in labor costs
mandated in this bill. A study by the NFIB estimated that 57
percent of job losses caused by this bill will come from small
businesses,\37\ which make up 99.9 percent of all businesses in
the United States.\38\ Despite these truths and the sensible
support of this amendment by Representative Haley Stevens (D-
MI), the amendment was disapproved by a vote of 24-21.
---------------------------------------------------------------------------
\37\MichaeL J. Chow and Paul S. Bettencourt, supra note 31.
\38\U.S. Small Bus. Admin., 2018 Small Business Profile, https://
www.sba.gov/sites/default/files/advocacy/2018-Small-Business-Profiles-
US.pdf.
---------------------------------------------------------------------------
Concerned with the bill's negative impacts on students and
young workers, Representative Rick Allen (R-GA) offered an
amendment to protect youth employment by ensuring future wage
hikes are halted if a significant number of young workers are
unemployed. Almost half of workers paid at or below minimum
wage are under the age of 25.\39\ A radical $15 minimum wage
rate would create an insurmountable barrier to entry for young
workers who generally possess fewer skills and less experience,
and who rely on entry-level jobs to build critical competencies
of personal responsibility, teamwork, conflict resolution,
discipline, and accountability. Committee Democrats continued
to demonstrate a lack of confidence in their proffered policy's
ability to benefit American workers by unanimously opposing
this amendment.
---------------------------------------------------------------------------
\39\U.S. Dep't of Labor, supra note 16.
---------------------------------------------------------------------------
Because Committee Republicans believe all American workers
deserve equal protection under the law, Representative Lloyd
Smucker (R-PA) offered an amendment to prohibit any state or
locality from adopting a minimum wage law that exempts
employees covered by a collective bargaining agreement. In
recent years, attempting to boost union organizing efforts,
localities such as Los Angeles, San Francisco, San Jose,
Oakland, Santa Monica, Long Beach, and the City of SeaTac,
Washington, passed minimum wage laws which exempted workers
covered by a collective bargaining agreement. The Los Angeles
Times editorial board called this ``hypocrisy at its
worst.''\40\ In a striking display of support for labor unions
at the expense of a large majority of their constituents,
Committee Democrats voted unanimously to defeat this amendment.
---------------------------------------------------------------------------
\40\Editorial, L.A. labor leaders' hypocrisy on minimum wage hike,
L.A. Times, May 29, 2015.
---------------------------------------------------------------------------
Concerned about the lack of transparency and fairness
displayed by the Committee Majority in the consideration of
this legislation, the Committee's Republican Leader,
Representative Virginia Foxx (R-NC), offered an amendment to
strike the eleventh-hour provision in the chairman's Amendment
in the Nature of a Substitute which delays the effective date
of the legislation for workers in the Commonwealth of the
Northern Mariana Islands.\41\ In defense of this last-minute
exemption, Representative Gregorio Kilili Camacho Sablan (D-MP)
explained that lower average wages in the Northern Mariana
Islands require a different approach to the minimum wage--an
argument that also applies to many regions of the United States
which are not afforded such consideration under this
legislation. In support of this eleventh-hour special
exemption, Committee Democrats voted unanimously to defeat this
amendment.
---------------------------------------------------------------------------
\41\Amendment in the Nature of a Substitute to H.R. 582 Offered by
Mr. Scott of Virginia Sec. 7(2).
---------------------------------------------------------------------------
In recognition that H.R. 582's sudden and extreme hikes in
labor costs would cause workforce automation to surge forward
at a faster rate, Representative Ron Wright (R-TX) offered an
amendment to stall the bill's damaging effects if the
Government Accountability Office (GAO) finds the bill will
cause more than 500,000 jobs to be lost due to automation.
Committee Democrats, aside from Ms. Stevens, opposed the
amendment, choosing to stand behind an ideological priority
even if real American jobs are shown to be in peril.
Finally, Representative Phil Roe (R-TN) offered an
amendment to protect workers in rural communities around the
country. The Roe amendment instructs GAO to study the effect of
this legislation on regions of the country with lower costs of
living, such as rural areas, and prevents the legislation from
going into effect if GAO finds it will result in the loss of
200,000 or more jobs in these areas. By unanimously voting
against this straightforward amendment, Committee Democrats
demonstrated a lack of concern for the regional implications of
this radical legislation which threatens millions of American
jobs around the country.
Conclusion
H.R. 582 would inflict a radical, unprecedented increase in
the federal minimum wage. It would harm workers, businesses,
and the economy while failing to provide benefits to the people
the bill is purported to help. For these reasons, and those
outlined above, Committee Republicans strongly oppose enactment
of H.R. 582 as reported by the Committee on Education and
Labor.
Virginia Foxx,
Ranking Member.
Glenn ``GT'' Thompson.
Brett Guthrie.
Glenn Grothman.
Rick W. Allen.
Lloyd Smucker.
Mark Walker.
Ben Cline.
David P. Roe, M.D.
Tim Walberg.
Bradley Byrne.
Russ Fulcher.
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